Reproductions supplied by EDRS are the best that …put together a two-volume series, Stepping Up...

DOCUMENT RESUME

ED 438 023 PS 028 019

TITLE Stepping Up Together: Financing Early Care and Education inthe 21st Century. Volume 2. Proceedings for "Making ItEconomically Viable: Financing Early Care and Education." AWorking Meeting (Santa Cruz, California, March 3-5, 1999).

INSTITUTION National Association of Child Advocates, Washington, DC.SPONS AGENCY David and Lucile Packard Foundation, Los Altos, CA.; Ewing

Marion Kauffman Foundation, Kansas City, MO.PUB DATE 1999-09-00NOTE 60p.; For Volume 1, see PS 027 694.AVAILABLE FROM National Association of Child Advocates, 1522 K Street, NW,

Suite 600, Washington, DC 20005. Tel: 202-289-0777, ext.211; e-mail: [email protected].

PUB TYPE Collected Works Proceedings (021)EDRS PRICE MF01/PC03 Plus Postage.DESCRIPTORS Bibliographies; Change Strategies; Child Advocacy;

Conference Proceedings; *Day Care; *Educational Finance;*Finance Reform; Financial Policy; *Infant Care; PreschoolChildren; Preschool Education; Public Policy; SystemsDevelopment; Tax Allocation; Tax Credits; Taxes

ABSTRACTThe need for an adequate financial base for the future of

quality early care and education (ECE) for young children is beingincreasingly recognized. This document presents the proceedings for a 1999working meeting of individuals from diverse fields to identify and explorepossible actions related to financing ECE for children birth through 5 yearsof age. The document includes discussions of the growing recognition of therelation between quality ECE and developmental outcomes, ECE fundingmechanisms, system and finance reforms to improve services for infants,universal preschool, and creation of a climate for increasing publicinvestment in ECE. Also included is a list of action steps to initiateefforts to improve ECE financing. Five insights are identified as emergingfrom the meeting: (1) renewal and reenergized commitment to provideleadership; (2) a consensus around a set of statements which can serve as afoundation for future action; (3) acknowledgement that a strong research andpolicy base has been built over the last decade; (4) the lack of a single,simple approach to ECE financing; and (5) recognition of the need toacknowledge public values about caring for your children, to develop diverseconstituencies, and to sharpen advocacy efforts. The document's fiveappendices contain the meeting agenda, a participant list, participants'proposals for next action steps in ECE financing, a 36-item bibliography ofresearch relevant to ECE financing, and a list of state commissionssupporting ECE financing. (KB)

Reproductions supplied by EDRS are the best that can be madefrom the original document.

o Stepping UpTogether

U.S. DEPARTMENT OF EDUCATIONoffice of Educational Research and Improvement

EDUCATIONAL RESOURCES INFORMATIONCENTER (ERIC)

This document has been reproduced asreceived from the person or organizationoriginating it.

Minor changes have been made toimprove reproduction quality.

Points of view or opinions stated in thisdocument do not necessarily representofficial OERI position or policy.

Financing Early Care andEduccttion in the 21st Century

9

Volume 2

00

PERMISSION TO REPRODUCE ANDDISSEMINATE THIS MATERIAL

HAS BEEN GRANTED BY

SSC 0 r1 e..Str5

TO t HE EDUCATIONAL RESOURCESINFORMATION CENTER (ERIC) 2

1

BEST COPY AVAILABLE

MAKI OMfling

CALL

ProeeedtwVIABLE.

MeetingA

ffinn@gazo @,511ifornEARLV CARE

°MtrfA p=5,AND1999

JDUCATION

OP

Pou additional

gco Ve26kv

National

copies Stepping

informationAssociation

ttc6MOE

(OP CO Steppingwebsite,

Advocates

ohenMeh

please

(INACA),

Together,

1:016533

2o2-289-07770M0

flOcIalwoso¢voovg.

5 BEST COPY AVAILABLE

September, 1999

Dear Colleague,

The David and Lucile Packard and the Ewing Marion Kauffman Foundations joined togetherin early March of this year to sponsor a working meeting, Making It Economically Viable;Financing Early Care and Education, in Santa Cruz, California. Fifty economists, children'sadvocates, academic experts, and public policy specialists met with a goal of formulatingviable financing strategies over the next decade for an early care and education (ECE) system.

In an effort to capture the spirit of the discussions that occurred during the meeting, we haveput together a two-volume series, Stepping Up and Stepping Up 7bgether, Financing EarlyCare and Education in the 21st Century. Responses to Stepping Up (which contains fourpapers commissioned for the meeting) were enthusiastic. We now are distributing SteppingUp 7bgether, the proceedings for the meeting.

We are disseminating these proceedings to share the essence of the discussions and lay outnew insights which we believe will contribute to making progress on these important issues.For those of you who attended, this volume will recall the meeting's conversations andhopefully rekindle the excitement we experienced about the possibilities of moving forward.For those of you who did not attend, we hope this volume provides a snapshot of the meetingand serves as an invitation to add your energies and expertise to the cause.

We are delighted to announce that the website dedicated to ECE finance issues that wasproposed at the meeting will be unveiled in the next six to eight weeks. It is our hope thatthis website will serve as a hub for discussions and a springboard for actions on these issues.

It is clear from the enthusiasm displayed and the ideas generated during the Santa Cruzmeeting that individuals from a variety of disciplines are ready to take action on ECE financingissues. We hope this report will provoke new thinking and intensified dialogue so that we canstep up together to these challenges. Thank you for your dedication and commitment to thisimportant work.

Stacie G. GoSENIOR PROGRAM OFFICER

YOUTH DEVELOPMENTEWING MARION KAUFFMAN FOUNDATION

Sincerely,

Marie ngSENIOR PROG MANAGER

PROMOTING CHILD AND ADOLESCENT DEVELOPMENTTHE DAVID AND LUCILE PACKARD FOUNDATION

Ewing Marion Kauffman Foundation

4

David and Lucile Packard Foundation

Stepping Uplbgether

Financing Early Care andEducation in the 21st Century

Volume 2

Proceedings for

MAKING IT ECONOMICALLY VIABLE: FINANCING EARLY CARE AND EDUCATIONA Working Meeting Santa Cruz, California March 3-5, 1999

We want to express our gratitude to the Advisory Committee for their substantive contributions: Harriet

Dichter, Deanna Gomby, Joan Lombardi, Cheryl Polk Nancy Sconyers, Carol Stevenson, and Jo lie Bain

Pillsbury (who also served as our meeting facilitator). Thanks also to all the individuals who attended the

Santa Cruz meeting, offered their thinking and expertise, listened to new ideas and took them to heart, and

who now are stepping up with colleagues around the country to seek solutions to our ECE financing crisis.

1. Proceedings 3

2. Appendix AMeeting Agenda 21

3. Appendix BParticipant List 25

4. Appendix CParticipants' Proposals for NextAction Steps for ECE Financing 29

5. Appendix DThe Foundation: A Selected Bibliography of ResearchRelevant to ECE Financing Published Since 1990 49

6. Appendix EState Commissions Supporting ECE Financing 51

1999, Ewing Marion Kauffman Foundation

Authorization to photocopy articles for personal use is granted by the Ewing Marion Kauffman Foundation. Reprinting isencouraged, with the following attribution: from Stepping up Together: Financing Early Care and Education in the 21stCentury, Volume 2, Proceedings for Making It Economically Viable: Financing Early Care and Education, a working meetinghosted by the Ewing Marion Kauffman and David and Lucile Packard Foundations, March 1999

5

Proceedings

n early March 1999, more than fiftyIindividuals from diverse fields gathered inSanta Cruz, California to identify and

explore actionable next steps in the realmfinancing for early care andeducation for children agesbirth through five. Themeeting, entitled Making ItEconomically Viable:Financing Early Care andEducation,' was convenedby the David and LucilePackard and Ewing MarionKauffman Foundations.Participants were asked toidentify viable early careand education (ECE)financing mechanisms andnext decade strategiesneeded for their adoption.This ambitious goalresulted in a dynamic gathering and a greatdeal of hard work. Out of this rich and vibrantexchange, which included exploration of areasdisagreement, common ground emerged uponwhich future efforts can be built.

of

come out of the meeting. Several of these ideassignal important shifts to a new phase ofthinking about and acting on ECE financingissues. Perhaps the most exciting is the notion

of renewal andreenergized commitmentof many individuals whonow are ready to jointogether in a collectiveeffort to provideleadership on theimportant issues of ECEfinancing. Some of thosecoming together have ahistory in the field; othersare new to the challenge.The veterans providedimportant substantive andcontextual information.The new voices offeredfresh perspectives and

insights-on the issues and on the dynamicswithin the field itself. This report conveysmuch of the dialogue and may be regardedas the first draft of a blueprint for collectiveleadership and action.

As much as some veterans in the

ECE field would like to find a

"silver bullet," a single, simple

solution to the financing crisis, inreality there is not one. Instead,

we must all look to an incrementalprocess that gets us to success,

and we must celebrate each smallstep along the way as we getcloser to our goal.

Jewel D. Scott, Executive Director

The Civic Council of Greater Kansas City

By the end of the final day, most participantsagreed that at least five significant insights had

BEST COPY AVAILABLE

Second, a set of statements emerged which canserve as a foundation for moving forward (see

gipping Up Thgether Financing Early Care and Education in the 21st Century

"Common Ground" below). Not every participant

fully agreed with every statement, but theconsensus was that the time is right to moveforward and accomplish progress-the detailscan be worked out in the process.

Third, participants acknowledged that muchhas been done that can inform the nextdecade's strategy. During the last ten years,advocates, researchers and policymakers havebuilt a strong base. We should use thisgroundwork to our advantage as well as learnfrom the incredible diversity of strategies fordeveloping revenue and increasing investmentscurrently evident across the nation at the localand state levels. With all that has been doneand is being done, we are able to move forward.

Fourth, participants conceded that there is nosilver bullet-no single, simple approach to ECEfinancing issuesand that one is unlikely to

emerge. As a result of this insight, a newopenness emerged to innovative approachesto financing.

Fifth, and finally, we concurred that we mustacknowledge public values about the care ofyoung children, develop diverse constituenciesand sharpen advocacy efforts; these actionsmust be central as we seek to address the manychallenges of financing ECE in our country.

Stepping Up: Financing Early. Care andEducation in the 21st Century, Volume I,contains the four papers commissioned for thisimportant meeting. This second volumediscusses the purposes, tenor and outcomes ofthe meeting itself. We invite you to read thisvolume and think about what you mightcontribute to tackling these enormouslychallenging issues. Then we hope you will joinus in this effort.

Common GroundUntil the closing moments, the meeting was abuzz with a wide range of ECE topics. Some ideasgenerated pointed disagreement and heated exchange; some were greeted with more subtleresponses. Realization of some ideas would require incremental system changes; accomplishingothers would require fundamental restructuring. But by the meeting's end, there was agreementthat the following statements could serve as starting points in a number of areas related to ECEfinancing.

Birth through age five is the chronological framework for an ECE system.

Financing strategies for the early care and education of children ages 3-5 can build on the growing preschoolmovement.

Financing strategies for the ECE of children ages 0-2 need to be differently conceptualized from those for ages3-5.

Parents need a wide range of choices for care of their children.

Parental leave should be on the agenda for consideration.

Greater attention to political realities and public values is needed.

A variety of financing mechanisms is needed to get full funding for an ECE system.

Multiple visions of ECE can coexist as the work on financing mechanisms proceeds.

Broader circles of constituent involvement are needed.

There is a foundation of work on which to build.

Specific elements of the ECE system should be matched with appropriate financing mechanisms.

New mechanisms that bring additional revenues to the ECE system can be identified and instituted into policy.

March 5, 1999, Santa Cruz, California

1. Proceedings

A Crisis in Our Midsthe ECE field has witnessed immense

Tprogress in recent decades. Workingtogether, many parents, practitioners,

advocates, researchers, and funders have takena hard look at the ECE marketplace as it nowexists. They have come to grips with the urgentneed to improve and expand services, and havemade significant progress toward definingquality and strengthening programs. But inthe process, they have returnedagain and again to a disturbingreality: parents with youngchildren-the source of mostECE dollars-simply cannotafford the cost of high-qualityservices. Indeed, many arehard pressed to pay forprograms and arrangements onwhich they now rely. The issueof an adequate financial base iscentral to future progress.

'Ibday, as never before, thereis an interest in young children.The political climate is open tothe establishment of new orenhanced ECE financingmechanisms and structures, butaccording to national experts, itwon't be open for long.

journey through childhood and beyond. 'Ib besure, learning takes place throughout life, butin the years between birth and kindergarten,children make developmental strides that formthe basis for later achievement.

Another line of research shows the vital linkbetween optimal developmental outcomes forchildren and quality ECE.3 It demonstrates that

Working DefinitionsThese definitions, proposed by participants, served as workingdefinitions during the meeting.

Financing Mechanisms: The strategies for generating funding (e.g.,payroll tax, social insurance, tax credit, local, state, federal generalfund revenues).

Financing Structure: The delivery systems for administering funding(e.g., higher education, elementary and secondary education, andsocial services).

Funding: Private or public monies that go to parents and to providers(money generated by financing mechanisms; usually refers to amountsof funds needed, e.g., $14 billion in funding).

Early care and education system: ECE system includes theprograms/providers and the infrastructure (e.g., professionaldevelopment, regulation, governance, accountability, public will, andinformation management/dissemination) for services for children birthto five years old.

The opening of this window reflects, in part,growing conviction that efforts to improveprospects for our nation's young people mustbegin in the early years; they cannot waituntil children are five or six years old. Overthe last two decades, researchers in fields suchas neuroscience, developmental psychologyand cognitive science have expanded ourunderstanding of the kind of care our childrenneed in these years.2 Their work on infant braindevelopment demonstrates and describes thepowerful influence of early experience on the

9

children benefit when non-parental caregiversare well qualified, well trained and wellcompensated; when child-adult ratios allowfor responsive care; when facilities are safe,comfortable and well maintained; and, whenactivities are engaging and appropriate foryoung children. We also know that improvingquality means raising cost. The yawning gapbetween the cost of high-quality care, theincomes of low- and middle-income familiesand the investments of the public sectordemand new approaches to ECE financing.

Stepping Up 'Thgether Financing Early Care and Education in the 21st Century

Researchers' insights into ECE program qualityhave influenced the day-to-day choices andactions of parents and the policy decisionsmade by elected officials, and business andcommunity leaders. The emergence of thisbody of research over the last decade is one ofseveral important factors that have created theopportunity to address our nation's ECEfinancing crisis.

A second important factor has been the floodof women with young children entering theworkforce. In 1975, 39% of mothers withchildren under the age ofsix were in the workforce;by 1998, that percent hadgrown to 65%.4 And,

today, one in three ofpreschool-age childrenwhose mothers are notin the labor force (2.7million) neverthelessexperience some formof ECE service on aregular basis.'

workforce-the Family Support Act (1988)

and the Personal Responsibility and WorkOpportunity Reconciliation Act (1996). In thiscontext, the need for ECE services for low-income working parents is undeniable-andso is their need for subsidies to pay for thoseservices. Low-income families spend an averageof 27% of their monthly income on ECEservices, compared with an average of 7%for families with higher incomes.' Althoughfunding for such services has increasedtremendously since 1990- federal funding alonehas nearly tripled'- parents still bear the brunt

of the cost and too manyparents still cannot affordthe kind of ECE servicesthey want for theirchildren.

For me, the Santa Cr

reenergized my co

to seeing that high-q

affordable care is av

uz meeting

mmitment

uality,

ailable for

every child. Now, I look forward

to putting an equal level of energy

into strategic, unified action to

create funding to make it happen!

Sarah M. Greene, CEO

National Head Start Association

A third factor that hasheightened interest in ECEissues is the new nationalwelfare policy. The growing conviction ofelected officials and the public that low-incomeparents should work and be independent ofgovernment cash assistance resulted in twomajor pieces of federal legislation that pushedmost low-income families into the

1. Proceedings

Recent research stressesthe importance of qualityin ECE programs andincreased demand byfamilies raises issues ofaccess, especially for low-income families. Evenwith the last decade'shistoric increase in stateand federal ECE funding,

there is a gaping disparity between the cost ofquality care and the financial commitmentsmade thus far. Some experts suggest thatcurrent funding levels may need to be tripled'in order to finance a high quality, universalECE system.

-I.

The Santa Cruz MeetingThe Santa Cruz meeting, designed tospark new ideas and explore possibleoptions for next steps on ECE finance

issues, opened on Wednesday, March 3, inthe late afternoon and adjourned on Friday,March 5.

Individuals from diverse backgrounds wereinvited, including economics, public policy,ECE, business and government. Some wereresearchers, somepractitioners, someadvocates, some funders.A few were new to theECE field itself.

The goals of the meetingwere extremely ambitiousgiven the short time frameand the diverse backgroundsof participants. Participantswere challenged to maintaina focus on financing issuesand a sense of urgencylaced the interactions.Materials and presentationsdistributed in advance ofand during the meeting helped providecommon information and suggested themes fordiscussion, but the diversity of participantsprecluded the presence of a shared conceptualframework. Frustration alternated withexcitement as people struggled to understandeach other and embrace the challenges.

education, and the French preschool system,the ecole maternelle.

Ground rules were set for the meeting thatencouraged shared purpose and commitment toachieving the goals. Participants were expectedto be present for the entire meeting and askedto read materials prior to their arrival.

The meeting format

found the meeting to beenergizing it made me anxiousto start work on the next steps.So many of us have been workingfor so long on these issues, and

the outcomes have not been veryencouraging. Now, / think maybethere really is hope.

Participants were asked to think beyond currentsolutions, contribute new perspectives onfinancing from other fields, and be open to newideas from other participants. In an effort tospur new thinking, a panel of participants madepresentations on four approaches to financingoutside the current American ECE system:public education, social insurance, higher

BEST COPY AVAILABLE11

Sandy BurudBurud and Associates

alternated between plenarysessions and small groupwork. On Thursdayafternoon, participantscreated small workinggroups. Ibpics were notpredetermined and theset of ideas aroundwhich interest coalescedranged from considera-tions of the kind of careprovided, to financingmechanisms, toaccomplishing andsustaining progress.

'By° of the workinggroups examined aspects

of the current system-care providedto infants and toddlers (ages 0-2) and careprovided to preschool children (ages 3-5).Participants concluded that there was virtue inzeroing in on the unique developmental needsof these two stages, that the provision ofservices to each group faces different challengesand opportunities. However, there also was anunderstanding that the needs of children andfamilies ultimately are best served whencontinuity exists between developmentalphases and the system links the two together.

A third group focused its attention on financemechanisms, especially tax policies. Finally, afourth group went beyond discussing what

Stepping Up Together: Financing Early Care and Education in the 21st Century

should be financed or how, to develop a processby which local/state constituencies for ECEfinancing and programs can be built, consultedand relied on for political support.

By inviting new voices into the meetingdialogue, the dynamics within the ECE fieldwere illuminated. Veteran participants werechallenged to reflect on their place within thefield and on their own perspectives, challengesthat were openly discussed by many. Somecame to realize justifiable pride in theiraccomplishments had fused with narrowcommitments to theirown frameworks.

Although the meetingdid not conclude withrecommendations onspecific financingmechanisms, advanceswere made on a numberof fronts. This in itselfcame to be viewed as animportant discovery. Itbrought many of us to two

realizations about making progress on theseissues. First is the belief that moving forwardon ECE financing issues is more likely to bean iterative, strategic processresembling theconstruction of a huge jigsaw puzzle in whichdifferent areas are worked on simultaneously-rather than a unified campaign with a singularfocus.

Second is the recognition of a healthy tensionbetween those who believe that there must bean agreed upon definition of the ECE system

and those who believe thelack of such a definitionshould not be allowed tostymie progress. Ratherthan representing twodistinct camps, the goals ofeach can be realized in theprocess-consensus on thedefinition will come intofocus as we move forward.

One of the keys to adequatefunding is to hold politiciansaccountable to the promises theymake regarding children'sprograms. Everywhere we turnchildren's programs are poorlyimplemented because of a political"bait and switch" where programsare never funded at the levelneeded to fulfill their promise.

Steve Barnett, ProfessorDirector, Center for Early Education

RutgersThe State University of New Jersey

BEST COPY AVAILABLE

1. Proceedings

12

Coming Tbgether Around Shared Interests

-within each of the small workinggroups, the interchange was richand many ideas were generated.

This section reports on these discussions andthe ideas for next steps that emerged.

Tax and Other FinancingMechanisms: Education,Research, ImplementationThis group proceeded from the assumptionthat new financing mechanisms need to bedeveloped and current ones improved,especially in the area of federal and state taxpolicy. Current U.S. tax policy related to ECEis not as effective as it could be. Benefits arenot large enough to affect consumer behavior,do not reach all taxpayers, and are not craftedto promote quality.9 Tax strategies are attractivebecause if tax policies are thoughtfullyconstructed, they are relatively stable, self-administered and can potentially help allfamilies.

The group identified three strategies to promotedevelopment and implementation of new andimproved financing mechanisms, especially inthe area of tax policy: 1) a concentrated effort toeducate the ECE community about financingmechanisms, especially tax policy; 2) a greaterability to research, analyze, and cost out

different concrete tax and financing proposals;3) an immediate action agenda to promoteexpansion of the current federal DependentCare Tax Credit (DCTC) and parallel state taxprovisions.

The first strategy is designed to promote greaterunderstanding of current and potential ECEfinancing mechanisms. This is especiallyneeded in the area of tax policy, where theissues can be quite complex. Without a greaterunderstanding of basic financing concepts, thegroup felt that the ECE community would havea difficult time moving forward on a commonfinancing agenda. This educational effort couldbe undertaken by "teach-ins" in the statesand/or at the federal level on financing issues,especially tax policy. The goal of these "teach-ins" would be to develop shared understandingof current financing mechanisms and createframeworks for analyzing new proposals. Theeffort should include a technical assistancecomponent to help communities build on whatthey have learned. Overall, the educationaleffort should be designed to lay the groundworkfor more knowledgeable discussion and workon financing options.

The second strategy is designed to movecommunities to develop and implement newfinancing proposals. For this to occur, theremust be a greater ability to research, analyzeand make reliable cost estimates for different

Action Steps: Tax and Other Financing MechanismsA Undertake a concerted educational effort in the ECE community to promote greater understanding of

current and proposed financing mechanisms, especially in the area of federal and state tax policy.

A Develop and cost out concrete tax and financing proposals that are suited to the particular segmentof the system being financed.

A Create action teams for immediate work at the federal and state levels to improve the federal DCTCand parallel state tax provisions.

13 Stepping Up Tbgether Financing Early Care and Education in the 21st Century

concrete financing proposals. This effort couldbe undertaken by ongoing work groups thatwould flesh out some of the ideas that havebeen advanced at this conference andelsewhere. They could work closely with aneconomist or other analyst with the ability tocost out proposals. They should shareinformation with the larger ECE community asthey proceed, especially in states with financingcommissions or other entities that could puttheir work to immediate good use. They couldconsult with experts from other fieldssuch astax, venture capital, housing and communitydevelopment. Theyshould work to ensurethat proposals by onework group wereintegrated with proposalsby other work groupsand ultimately support anintegrated ECE system.

For example, in the taxarea a work group ofinterested individualscould be organized to

10 explore in more depth anidea advanced by LouiseStoneythe creation of aChild Care Facility 'Pax Credit modeled on theLow-Income Housing Tax Credit (HousingCredit). The Housing Credit is the lestfederal program to fund the development andrehabilitation of low-income housing. It worksby giving incentives in the form of tax credits toprivate investors, who in turn provide equityfinancing for low-income housing projects. TheHousing Credit gives low-income families thechance to live in housing that they otherwisewould not be able to afford. A Child CareFacility Tax Credit could similarly helpencourage the building or renovation of childcare facilities in low-income neighborhoods.

1. Proceedings

work group as the third strategy, a movealready supported by the ECE community. BothCongress and many state legislatures, flush withbudget surpluses, are considering tax cuts. Nowis the time to make sure any tax cuts includestrong provisions to help families with ECEexpenses. An action team should be organized towork with the National Women's Law Center inits ongoing efforts to improve the DCTC at thefederal level and establish or improve parallelstate tax credits or deductions for child care.

The DCTC, at $2.5 billion, is the third largestsource of federal supportfor ECE, after Head Start($4.7 billion) and the Child

Care and DevelopmentFund ($3.4 billion). It allows

families with child careexpenses to offset their taxliability by a percentage oftheir qualifying expenses.The maximum taxassistance available rangesfrom $1,440 for familieswith two children andannual incomes less than$10,000 to $960 for families

with two children andannual incomes over $28,000, yet few familieswith low-incomes can afford to spend enoughon child care to obtain the maximum taxassistance from the DCTC. At best, the DCTCoffsets only 20% to 30% of a family's child careexpensesup to $2,400 in expenses for onechild and $4,800 in expenses for two or morechildren. Moreover, because the DCTC is notrefundable, it offers no assistance to low-incomefamilies who have no tax liability.

The Santa Cruz meeting helped me

to understand that the challengeof expanding ECE funding is a less

technical issue and a more politicalone. We need to build public andpolitical will around a set ofstrategies that go beyond childcare to help families balance homeand work responsibilities.

Evelyn Ganzglass,Director of Employment and Social

Services Policy Studies National Governors'Association Center for Best Practices

Expansion and improvement of the DCTC andparallel state tax provisions was proposed by this

BEST COPY AVAILABLE

About half the states have tax credits ordeductions that parallel the federal DCTC. Onlya few are refundable. Minnesota has one of themost generous credits for low-income families,providing an offset against state taxes of 100%of the federal DCTC, and can be received as a

14

tax refund if the family has little or no taxliability. It is indexed for inflation.10

The tax work group proposed modifying thefederal DCTC in four ways:

A Make it refundable. Ensure that families who

owe no federal income taxes can receive a

refund and thereby benefit from the DCTC.

A Ensure that it is indexed for inflation. Ensure

that the DCTC does not have static limits that

have to be changed

legislatively.

A Increase the expense

limit. Ensure that the

DCTC's limits for allowable

expenditures reflect the

real costs of paying for

high-quality child care.

A Increase the percentage of

costs covered. Ensure that

families, especially at low

incomes, can claim a

greater percentage of

their actual child care

costs, so that the DCTC can

broaden parental choices and make

a difference for more children.

improve ECE services for babies, ages birththrough two, working on the premise thatthe needs of this age group are distinct.

'Ibday, more than half of all mothers return towork before their babies' first birthdays; 48%of the nation's children under the age of 3 arecared for during working hours by someoneother than a parent. About 17% are cared forby relatives, 12% are in child care centers, 11%in family child care homes and 4% are in theirown homes, cared for by a non-relative.11 Theneed for care for

The single most important insightfor me recently is that ECE

programs cannot survive and

provide quality services if they relyon parent fees and/or vouchers

alone. ECE programs need direct

financial support in addition, justas higher education institutions do.

Joan Lombardi, Senior AssociateBush Center in Child Development and

Social Policy, Yale University

The group proposed similar changes to state tax

provisions for child care and advocated that

states without such provisions consider adding

them to their tax codes.

Focusing on Babies:Research, Networking,Parental LeaveA second work group chose to focus on systemand finance reforms that would expand and


our youngest children is great,but high-quality servicesare difficult to find. Infact, one study estimatesthat fully 40% of theinfant and toddler roomsin child care centers areof such poor quality thatthey endanger children'shealth and safety.12 Otherresearch questions thequality of care for babiesin family child carehomes.13

11

This group advancedfour sets of ideas:

First was the idea that ECE for babies offers adiscrete set of challenges that may get lost ingeneral discussions of the 0-5 age span. Thisstage of childhood-and of parenthood-bringsdifferent needs, and merits separate considera-tion. Nevertheless, the group believed that carefor babies could and should be coordinated withECE for preschoolers.

Second, the group asserted that the field needsto know more about the current state of care forbabies. They urged an effort to document whatalready is known, and chart directions forfurther research.

Stepping. Up 7bgether: Financing Early Care and Education in the 21st Century

Action Steps: Focusing on Babies

A Analyze the existing supply of all types of caregiving settings for babies, as well as its qualityand real costs.

A Study existing policies and programs for babies, the status of parental leave, and finance mechanismsthat most directly affect children ages birth to two years, such as child care subsidies.

A Establish a working group to map out a research agenda aimed at filling the gaps in what weknow about ECE for infants and toddlers.

A Explore the implications of incorporating paid parental leave into an ECE system; include aninternational perspective.

A Convene stakeholders from business, labor, and other sectors to consider ways to incorporateinfant/toddler care into an integrated ECE system.

A Work on models of neighborhood support centers that would support and connect all of theadults who care for young children.

Third, the group believed that a key toimproving care for babies is providingcommunity-based supports and resources forall types of caregivers-parents, relatives, familychild care providers, and center-based providers.They proposed establishing networks of CaringCommunity Centers-neighborhood centerswhere all caregivers, including parents, could gofor company, advice, information, or referrals.The group viewed the creation of such neigh-borhood support centers as an enhancement

12 effort that would supplement-but not replace-the improvement of existing early childhoodservices and the expansion of subsidies.

Because these support centers could build onexisting organizations or programs (such asfamily resource centers, resource and referral

organizations, Early Head Start programs, HealthyStart, programs funded by IDEA, Part C, orcommunity-based organizations), some fundingcould come from existing funding streams.Some new monies would be needed however.Budget surpluses and the tobacco settlementfunds were mentioned as possible sources.Public-private partnerships also could beestablished to support these centers.

And fourth, the group agreed that a parentalleave option is fundamental to any scheme of

1. Proceedings

care for babies. This priority was based both onthe recognition of the limited availability andpoor quality of infant care available to mostfamilies and on the shared sense that parentsshould be able to choose whether they wantto care for their child in the first year of life.Participants proposed building a system ofparental leave based on existing laws andpractices. For example, the 1993 Family and

Medical Leave Act gives employees in compan-ies with 50 or more employees the right to take12 weeks of unpaid leave. Building on this lawcould mean extending unpaid leave to all newparents, regardless of the size of the company,and extending the length of the leave to 12months following the birth or adoption of a child.State parental leave laws could be extended insimilar ways.

Efforts to extend eligibility could be combinedwith efforts to establish financing mechanismsfor paid parental leave. Some financingmechanisms discussed included:

A Expanding the use of state disability funds.

Disability funds, collected from payroll taxes,

could be expanded to fund parental leave. In

California, state disability insurance covers six

weeks of "disability" following the birth of a child.

16

b. Using Child Care and Development Block Grant

(CCDBG) funds. These funds could be used to

compensate parents who stay home to care for

their children.

A Modifying the DCTC to provide tax benefits to

stay-at-home parents of very young children.

Presently, the DCTC is available only to

employed parents who can document child

care expenses.

Moving toward UniversalPreschool: Education,Advocacy, Funding

The third work group developed strategiesaimed at ensuring that all children enterkindergarten ready to succeed by means ofuniversal preschool programs. It suggestedways to move toward universal preschoolprograms that are developmentally appropriate;available to all three and four year olds whoseparents choose to enroll them, regardless ofwhether parents are working; offer full-dayprogramming, with some part of the day freeand some paid for on a sliding scale; and, inwhich programs and staff arelicensed/credentialed.

The preschool group proposed to fund theseprograms from local, state or federal dollars,

with state/local control. The group suggestedthe following strategies for increasing federalspending on ECE:

s. Redirect unspent TANF dollars to preschool. $3-4

billion are now available; $8-bo billion might

become available over the next several years.

A Expand existing federal funding streams.

Among the funding streams might be Head Start

and the CCDBG.

A Use part of the federal budget surplus: a

percentage of this surplus might be dedicated

to children, including ECE.

Participants noted several advantages of theuniversal preschool strategy. It holds appealfor parents of preschoolers, and may pleaseemployers as well. Winning over other taxpayersmay be more difficult, however. Framing theissue as an extension of school reform providesa strong rationale for raising or allocating taxdollars for early education. When ECE ispresented as a matter of school readiness, itmay be seen as a way to help children ratherthan a way to build or strengthen an institution.

13

On the other hand, to succeed, universalpreschool must confront some deeply rootedconvictions including the notion that ECE is afamily matter, not a public responsibility. Thisstrategy must also address the public's view of

Action Steps: Moving Toward Universal PreschoolA Commission case studies of existing state level initiatives that are moving toward universal preschool.

Disseminate the findings, especially in states that are considering their own programs.

A Establish a working group to consider ways to redirect TANF dollars to preschool programs.

A Join forces with existing groups working to expand existing funding streams and to developnew strategies.

.6, Develop a powerful rationale for using part of the federal budget surplus to support ECE initiatives.

A Study possible sources for increased state spending on universal preschool, including lottery

revenues, tobacco settlement dollars, and new tax revenues from Internet sales.

7 Stepping Up Tbgether: Financing Early Care and Education in the 21st Century

14

ECE as tabysitting." Finally, resistance alsomay come from private for-profit or non-profitchild care providers, who may fear competitionfrom state preschool programs. Given thesestumbling blocks, the universal preschool groupidentified advocacy and public engagement ascrucial elements of their strategy.

Creating a Climatefor Change: Clarity,Analysis, Educationand Sustainabi I ity

The fourth work group asked: "What needsto happen to increase public investment inECE?" They worked from the perspective thatour country has moved from a representativegovernment, in which elected officials speakfor their constituents, to an agency govern-ment, in which elected officials determinewhat constituents want and then act as agentsto obtain those wishes. Therefore, the key tochanging policy in this new environment is tounderstand and educate public opinion; thewill of the public determines how electedofficials act.

This group devoted considerable time todiscussing an assessment of public supportfor ECE prepared for the meeting.14 EthelKlein, the author and a member of this group,asserted that by and large, the American publicdoes not consider public provision of ECE to be

important to society and believes that parentsneed to bear more responsibility for the healthydevelopment of their own children. Resistanceto universal ECE is rooted in the view that childrearing is the responsibility of parents, notgovernment. Americans do believe, however,that government has a role to play in reducingpoverty, and will invest in programs aimed athelping poor children and enabling welfarerecipients and the working poor to hold jobs.

The group developed an iterative model forlearning from and educating the public andgaining their support. The model consists of anumber of components. All of the componentsmust be implemented, but they may take placein different sequences depending on thedynamics of particular situations.

A Articulate ECE financing requests with clarity.

Participants in this group agreed that forprogress to be made advocates must beclear about what is to be funded, currentlysuch clarity does not exist. Group memberswho have experience working with electedofficials suggested that support would beeasier to obtain if such clarity accompaniedadvocacy efforts.

As a starting point, therefore, the groupcreated a "straw" vision so they then couldcreate a process to achieve the vision.The vision they identified was a universalsystem of high-quality ECE servicesdedicated to enabling all children to enter

Action Steps: Creating a Climate for ChangeA Clearly delineate the quality ECE system that you want to fund.

A Calculate the cost of such a system and the benefits to the public of instituting it.

A Analyze successful advocacy efforts, especially in states with promising ECE initiatives,and map out a research agenda to support public engagement work.

A Organize broad-based public meetings in each state, bringing in new people and new ideas toeducate the public and persuade them to support fully funding quality programs.

1. Proceedingsl8

school prepared to succeed. Such a systemwould be sustainable, fully-funded, andinclude a high degree of parentalinvolvement.

Analyze political realities and map public

values. Efforts to learn from and educatethe public should be informed by cogentanalyses of the political environment andof public values, based on qualitative andquantitative opinion research. In addition,advocates should create campaigns thatdraw on communications expertise topersuade the public tosupport a high qualityECE system.

b. Educate the public about

the costs of ECE services

to be financed. Afterachieving clarity aboutwhat is to be funded,the group agreed thatadvocates need toeducate the publicabout the actual costsof the system, as wellas the current local,state and federalfunding sources for theECE system.

A Do a cost/benefit analysis of the financing

request. Cost/benefit analyses could be usedto inform the public of the return on invest-ments that they might expect to see if theyagree to fully fund a high-quality ECEsystem. The goal would be to persuade thepublic that intervention and prevention areless expensive than the costs of badoutcomes for children.

A Implement and evaluate. At some time afterthe adoption of the agreed-upon changes,the public input process should begin again

to determine whetherpublic support still exists.Reevaluation of existingprograms and mechan-isms may be necessary,as well as updatedcost/benefit analyses.

The basic challenge facing

advocates of ECE is getting

Americans to understand thatproviding ECE is a social good.

That is the key to moving this issue

further into the public realm. Thatdoor has been opened by the more

recent efforts to discuss ECE but,

as that work shows, the challengeis not naming the problem. The

challenge is getting the public

to accept our assertion thatgovernment has some

responsibility to and forour children.

Ethel KleinEDK Associates

BEST COPY AVAILABLE

This iterative model,acknowledges on corepublic values andpersuades the publicof the soundness ofinvestments in qualityECE services, therebysupporting the establish-ment of an ECE systemthat is sustainableover time.

Stepping Up: Financing Early Care and Education in the 21st Century

15

16

1. Proceedings

The Next StepsLike other forms of turbulence,brainstorms tend to be brief, intense, andmemorable. The ideas and suggestions

precipitated during the Santa Cruz meeting wereabundant and wide-ranging, but little time wasavailable for elaboration. Below we havecompiled some of the downpour- althoughdocumentors' "pails" could not begin to collectall of the thoughts and suggestions that flowedfrom participants. Here we present a broadview, suggesting several overarching challengesthat emerged from the Santa Cruz dialogue.

A Develop a shared mental model within which

new ideas can be generated, tested, and

explored. Participants were in agreementabout the importance of strategies linkingdiverse finance mechanisms into anintegrated ECE system. Some believed thatthis would not happen until the field itselfdevelops a more unified vision that wouldserve as a framework for building an ECEsystem. However, most agreed that withoutagreement on a shared model, work onfinance issues should still proceed.

A Build capacity to work on ECE finance.

Relatively few experts in finance have greatfamiliarity with the nuances of ECE policyand practice, and relatively few earlychildhood educators can discuss financeissues in great detail. "'teach -ins" or similarefforts to educate key stakeholders in statesand localities would significantly enhanceefforts to address ECE financing issues.

A Support further research in the realm of ECE

finance. Many key questions remainunanswered. For example, efforts todetermine the actual costs of high qualityECE are needed both at the federal and

state level. We also need to know moreabout the economic dynamics of systemicreform and the political dynamics ofsuccessful advocacy. And, we don't knowenough about applying lessons learnedfrom high quality individual programs toentire systems (local, state, or national).

A Create a climate for change. Public support forECE financing issues is neither widespreadnor deep. Many in the field do not have aclear understanding of the role publicvalues play in this dynamic. More workneeds to be done in analyzing politicalrealities and mapping public values as .

they relate to ECE issues. We must broadenthe constituency base by engaging newstakeholders. Efforts to strengthen advocacyand public support must be initiated tosupport and sustain change.

A Build on existing work on finance strategies and

0 mechanisms. Important work on financingalready has been done or is in process.Many of the suggestions raised at theSanta Cruz meeting are being thoughtabout, developed, or tested somewhere inthe nation. Lest we reinvent the wheel, itis important to survey existing work onfinance strategies and mechanisms, andto build on them.

It is clear from the energy and enthusiasmdisplayed during the meeting that manyindividuals from across the country and acrossdisciplines are ready to take action. We hopethat you will join with us and others like uswho are taking on the challenges of collectiveleadership to address the ECE financingchallenges we face today. Much of importanceemerged from the spirited discussions and the

valuable insights that characterized the

meeting. A core set of statements now exists

that can serve as a guide. We know there is a

foundation from which to launch our efforts.We have given up on the notion that there is a

ENDNOTES

single, simple approach to ECE financing

challenges. And we know that political viabilityand sustainability will have to involve morethan educating the public; we must be listeningas well.

1. See Appendix A for an agenda and Appendix B for a list of participants.

2. For a summary, see Rethinking the Brain, New Insights into Early Development, by Rima Shore. New York, NY:Families and Work Institute, 1997.

3. E. Peisner-Feinberg M. R. Burchinal, R. Clifford, N. Yazejian., M. L. Culkin, J. Zelazo, C. Howes, P. By ler, S.L. Kagan,J. Rustici, The Children of the Cost, Quality, and Outcomes Study Go To School (Chapel Hill, N.C.: Frank PorterGraham National Center for Early Development and Learning, University of North Carolina at Chapel Hill, 1999);National Institute of Child Health and Human Development Early Child Care Research Network, "Child OutcomesWhen Child Care Center Classes Meet Recommended Standards for Quality,"American Journal of Public Health, v.89, no. 7 (July 19901072-1077.

4. U. S. Department of Labor, Bureau of Labor Statistics (Unpublished data, 1999).

5. National Center for Education Statistics, "ECE Program Participation for Infants, Toddlers, and Preschoolers"(Washington, DC: NCES, October 1996).

6. "Who's Minding the Kids? Child Care Arrangements: Fall 1§91," Survey of Income and Program Participation, CurrentPopulation Reports, P7o-36, U.S. Bureau of the Census (Washington, D.C.:1991) 21.

7. Federal funding in FY1990 was $5.2 billion; for FY,999, funding was $14 billion. Ron Haskins, Staff Director, HumanResources Subcommittee, Ways and Means Committee, U.S. House of Representatives, 1999.

8. Louise Stoney, Toward Solutions: Through the Child Care Funding Maze, Stepping Up: Financing Early Care andEducation in the 21st Century (Washington, D.C.: David and Lucile Packard and Ewing Marion KauffmanFoundations, 1999) 7.

9. Ibid., 7-8.

io. J. Steinschneider, E. Donahue, N. Campbell, E V. Williams, Making Care Less Taxing: Improving State Child andDependent Care Tax Provisions (Washington, D. C.: National Women's Law Center,1998).

B. Willer, S. Hofferth, E.E. Kisker, et. al., The Demand and Supply of Child Care in i990 (Washington, D. C.: NationalAssociation for the Education of Young Children, 1991).

12. S. Helbum, M. Culkin, J. Morris, N. Moran, C. Howes, L. Phillipsen, D. Bryant, R. Clifford, D. Cryer, E. Peisner-Feinberg, M. Burchinal, S. L. Kagan and J. Rustici, "Cost, Quality, and Child Outcomes in Child Care Centers: KeyFindings and Recommendations," Young Children" (May 1995) 40-44.

13. E. Galinsky, C. Howes, S. Kontos, M. Shinn, The Study of Children in Family Child Care and Relative CareKeyFindings and Policy Recommendations," Young Children (November 1994) 58-61.

14. E. Klein, "Funding Early Care and Education: An Assessment of Public Support," Stepping Up: Financing Early Careand Education in the list Century, Vol. 1, a publication of four papers commissioned for Making It EconomicallyViable: Financing Early Care and Education, a working meeting hosted by the Ewing Marion Kauffman and Davidand Lucile Packard Foundations (June, 1999).

21 Stepping Up Together: Financing Early Care and Education in the 21st Century

17

18

1. Proceedings

Stepping Up Thgether:Kicking Off

Santa Cruz meeting participants suggested that the following actionsteps could be taken to kick off efforts to improve ECE financing.

A Educate yourself on ECE financing issues. If you have ECE finance expertise,

educate colleagues, advocates, the media and the public about financing.

A Join with those who are actively working with policy makers.

A If you have ECE expertise, share it with policy makers, advocates, the media andthe public to make the case for the need for new investments in ECE.

o Think openly about possibilities before rejecting a new approach to financing.

A As a parent, share your concerns about our ECE services with others, especiallyelected officials and the media.

A Undertake a concerted educational effort in the ECE community to promotegreater understanding of current and proposed financing mechanisms, especiallyin the area of federal and state tax policy.

A Communicate lessons learned as new financing models are developed.Disseminate the materials broadly.

A Develop and cost out concrete tax and financing proposals that are suitedto the particular segment of the system being financed.

A Create action teams for immediate work at the federal and state levels to improvethe federal DCTC and parallel state tax provisions.

A Analyze the existing supply of all types of caregiving settings for babies,as well as its quality and real costs.

A As a child advocate, reach out to educate and listen to the public. Involvethe public in your advocacy work.

A Study existing policies and programs for babies, the status of parental leave, andfinance mechanisms that most directly affect children ages birth to two years,such as child care subsidies.

A Establish a working group to map out a research agenda aimed at fillingthe gaps in what we know about ECE for infants and toddlers.


A Explore the implications of incorporating paid parental leave into anECE system; include an international perspective.

A Convene stakeholders from business, labor, and other sectors to considerways to incorporate infant/toddler care into an integrated ECE system.

A Work on models of neighborhood support centers that would support andconnect all of the adults who care for young children.

A Commission case studies of existing state level initiatives that are moving towarduniversal preschool. Disseminate the findings, especially in states that areconsidering their own programs.

A As an elected official, participate in improving the financing of ECE. Speak outpublicly about the needs of families for high-quality ECE and for adequatefunding to support it.

A Establish a working group to consider ways to redirect TAW dollars to preschoolprograms.

A Join forces with existing groups working to expand existing funding streams andto develop new strategies.

A Develop a powerful rationale for using part of the federal budget surplusto support ECE initiatives.

A Study possible sources for increased state spending on universal preschool,including lottery revenues, tobacco settlement dollars, and new tax revenuesfrom Internet sales.

A Clearly delineate the quality ECE system which you want to fund.

A Calculate the cost of such a system and the benefits to the public ofinstituting it.

A Analyze successful advocacy efforts, especially in states with promisingECE initiatives and map out a research agenda to support publicengagement work.

A Organize broad-based public meetings in each state, bringing in new people andnew ideas to educate the public and persuade them to support fully fundingquality programs.

For additional copies of Stepping Up or Stepping Up Together,

or for further information about the website, please contact theNational Association of Child Advocates (NACA), 202-289-0777, X2I1

or cohemOchildadvocacy.org.

BEST COPY AVAILABLE23 Stepping Up Thgether Financing Early Care and Education in the 21st Century

19

Making It Economically. Viable:Financing Early Care

and EducationMarch 3-5, 1999

Santa Cruz, CaliforniaAppendix A

AGENDAThe overall purpose of this meeting is to provide a forum for key stakeholders to identify viablefinancing frameworks and develop an action agenda to move toward the ultimate goal of givingall children access to quality early care and education.

The meeting will be successful if, by its end, you have contributed to:

A The formulation of one or several viable financing mechanisms for the early care andeducation system for children 0-5;

A The development of financing frameworks identifying the partners, research, politicalstrategies, and key stakeholders and constituencies necessary for adopting, implementing andsustaining the chosen financing mechanisms; and,

A The identification of specific next steps to be taken to move an action agenda forward.

Wednesday, March 31:oo pm Facilitators E Recorders Meeting

The facilitators and recorders have an opportunity to review and discuss their role.

3:0o pm Registration

4:0o pm Welcome and Purpose

Over the last twenty years, a great deal of research has been done to map out the kind of earlycare and education we want for all our children. It is time now to turn our thinking and effortsto deciding how we should finance such a system. During this meeting everyone will have anopportunity to devise financing strategies that will guarantee children the out-of-home supportthey need during the first five years of life while enabling parents to work.

It is our challenge to create an action agenda for the next decade that will make a difference inthe affordability of accessible, quality early care and education for all children. It is our hopethat everybody will find this work useful in guiding their own efforts, and that collectively wecan take advantage of a window of opportunity that exists to establish new or enhanced earlycare and education financing mechanisms.

SPEAKERS:

Stacie Goffin, Ewing Marion Kauffman Foundation

Marie Young, The David and Lucile Packard Foundation


21

5:0o pm Mapping The Policy Space

The participants identify the issues surrounding the development of financing mechanisms,discuss the proposed criteria for an early care and education system, and adopt a commonperspective on the concept of a viable financing framework.

Facilitator: Ione Bain Pillsbury

6:3o pm Reception

7:00 pm Dinner

8:oo pm Close

Thursday, March 48:oo pm Continental Breakfast

8:3o pm Thinking about Financing in a New WayPanel discussion of alternate scenarios for financing early care and education in the 21st Century.

SPEAKERS:

Teresa Vast, Financial Aid Think Tank

Steven Barnett, Rutgers University

Duffy Campbell, National Women's Law Center

Mark Greenberg, Center for Law and Social Policy

9:45 am Exploring the Issues (Round I)Participants attend concurrent sessions to engage in more in-depth discussions exploringspecific financing mechanisms, issues in implementing a quality early care and education

22 system, and the challenges of creating a climate for change.

SYMPOSIA LEADERS:

ECE: FINANCING MECHANISMS: CREATING A CLIMATE FOR CHANGE

Shirley Stubbs Gillette Terry Vast Ethel Klein

Susan Muenchow Duffy Campbell Faith Wohl

Mark Greenberg Nancy Sconyers

Steven Barnett

10:30 am Break

10:45 am Exploring the Issues (Round 2)Participants attend concurrent sessions to engage in more in-depth discussions exploringspecific financing mechanisms, issues in implementing a quality early care and educationsystem, and the challenges of creating a climate for change.

SYMPOSIA LEADERS:

ECE: FINANCING MECHANISMS: CREATING A CLIMATE FOR CHANGE

Gina Adams Terry Vast Deb Wadsworth

Abby Cohen Duffy Campbell Joan Lombardi

Mark Greenberg Harriet Dichter

Steven Barnett

262 Appendix A

11:30 am Identifying the Viable Financing Mechanisms

Participants identify the financing mechanisms that are of most interest to them. The groupreviews and adopts a common approach to more fully develop the financing framework(s)to support the adoption and implementation of the selected financing mechanisms.

12:3o pm Developing the Financing Frameworks (working Lunch)Participants work in small groups to more fully develop the financing mechanism(s)and articulate the financing framework(s) needed to support the adoption of thefinancing mechanism(s).

FACILITATORS: RECORDERS:

Harriet Dichter Nancy Sconyers

Anne Mitchell Bob Pillsbury

Margy Walker Carol Stevenson

Marge Petruska Cheryl Polk

Karen Hill Scott Eleanor Clement Glass

Barbara Reisman Deanna Gomby

2:3o pm Break

3:3o pm Negotiating a Common Action AgendaBased on the work of the groups on the financing frameworks, all the participantsidentify strategies for the development and implementation of financing mechanisms.Participants choose areas that would benefit from common action and decide how tocoordinate their efforts.

5:3o pm Break

6:3o pm Reception and Dinner

8:oo pm Close 23

Friday, March 58:00 am Continental Breakfast

8:3o am Outlining the Work PlanBuilding on the prior day's work, the participants identify the specific next stepsto be taken to move the common action agenda forward.

10:00 am Break

10:30 am Next Steps

Participants discuss what is required to take the next steps identified in the work planand share their own ideas about what follow-up actions to take in the next three months.

12:00 pm Concluding Luncheon

1:00 pm Adjourn

27Stepping Up Tbgether: Financing Early Care and Education in the 21st Century

Participant ListRevised 8/11/99

Gina AdamsThe Urban Institute2100 M Street, NWWashington, DC 20037Tel: (202) 261-5674; Fax: (202) 452-1840gadamsOui.urban.org

Steven BarnettRutgers, SUNJ, Graduate School of Educationio Seminary PlaceNew Brunswick, NJ 08903Tel: (732) 932-7496 X235Fax: (732) 932-6803wbarnetOrci.rutgers.edu

Lissa BellUnion Child Care Coalition2521 Channing Way #5555Berkeley, CA 94720Tel: (510) 643-7646; Fax: (510) 642-6432lissabOsocrates.berkeley.edu

Margaret BoyerAlliance of Early Childhood Professionals160o E. Lake StreetMinneapolis, MN 55407Tel: (612) 721-4246; Fax: (612) 721-0435allecp0aol.com

Richard BrandonUniversity of Washington324 Parrington Hall, Box 353060Seattle, WA 98195Tel: (206) 545-8483; Fax: (206) 616-5769brandonOu.washington.edu

Sandra BurudBurud and Associates88o Apollo Street, Suite 315El Segundo, CA 90245Tel: (310) 640-0300sburudObrighthorizons.com

Nancy Duff CampbellNational Women's Law CenterII Dupont Circle, NW, Suite 800Washington, DC 20036Tel: (202) 588-5180campbellOnwlc.org

29

Appendix B

Abby Cohen5337 College Avenue, Suite 332Oakland, CA 94618Tel: (510) 601-7319; Fax: (510) 594-0753abbyccm&aol.com

Harriet DichterPhiladelphia Citizens for Children and Youth7 Benjamin Franklin ParkwayPhiladelphia, PA 19103Tel: (2,5) 563-5848; Fax: (215) 563-9442hdichterOaol.com

Christine FergusonRI Department of Human Services600 New London AvenueCranston, RI 02920Tel: (401) 464-2121; Fax: (401) 464-3677

Evelyn GanzglassNational Governors' Association444 N. Capitol Street, Suite 267Washington, DC 20001Tel: (202) 624-5394; Fax: (202) 624-5313eganzglass0nga.org

Martin GerryUniversity of Kansas1052 Dole Bldg.Lawrence, KS 66045Tel: (785) 864-0572mgerryOukans.edu

Shirley Stubbs GilletteGillette Consulting Group3606 NE BaswoodLee's Summit, MO 64064Tel: (816) 373-0911; Fax: (816) 373-5914gilletteOgni.com

Eleanor Clement GlassThe San Francisco Foundation225 Bush Street, Suite SooSan Francisco, CA 94104-4224Tel: (4,5) 733-8500ecgOsfforg

Stepping Up 7bgether: Financing Early Care and Education in the 21st Century

25

Stacie GoffinEwing Marion Kauffman Foundation4801 Rockhill RoadKansas City, MO 64110-2046Tel: (816) 932-1174; Fax: (816) 932-1450sgoffin0emkf. org

Deanna GombyThe' David and Lucile Packard Foundation300 2nd StreetLos Altos, CA 94022Tel: (650) 948-7658; Fax: (650) 941-2273

Mark GreenbergCenter for Law and Social Policy1616 P Street, NW, Suite 150Washington, DC 20036Tel: (202) 328-5132mhgreenOclasp.org

Sarah GreeneNational Head Start Association1651 Prince StreetAlexandria, VA 22314Tel: (703) 739-0875; Fax: (703) 739-0878s.greene0nhsa.org

Scott GroginskyNational Conference of State Legislatures1560 Broadway, Suite 700Denver , CO 80202Tel: (303) 830-2200scott.groginskyOncsl.org

Carol Guyer155 Mountain Wood LaneWoodside, CA 94062-2563Tel: (650) 851-5512; Fax: (650) 529-9172

26 froggie0best.com

Suzanne HelburnDept. of Economics, Box 181, Univ. of CO at Denver1200 Larimer StreetDenver, CO 80204Tel: (303) 443-2408; Fax: (303) 443-2195shelburnOcu.campuscw.net

Sharon Lynn KaganYale University310 Prospect StreetNew Haven, CT 06511-2188Tel: (203) 432-9931; Fax: (203) 432-9933

Ethel KleinEDK Associates101 5th AvenueNew York, New York 10003Tel: (212) 367-7317; Fax: (2,2) 367-7517edkpollMaol.com

3 Appendix B

Michael LevineCarnegie Corporation of New York437 Madison AvenueNew York, NY 10022Tel: (212) 207-6314; Fax: (212) 754-4073

Joan Lombardi1941 Shiver DriveAlexandria, VA 22307Tel: (703) 660-6711; Fax: (703) 660-8924lombardijOaol.corn

Anne MitchellEarly Childhood Policy ResearchHCR #1, Box 77Climax, NY 12042Tel: (5,8) 966-4585; Fax: (518) 966-5503awm itchel 10a01. corn

Gwen MorganWheelock Collegezoo The RiverwayBoston, MA 02215Tel: (6,7) 278-4097; Fax: (617) 232-5302

Margaret PetruskaThe Heinz Endowments3o CNG Tower/625 Liberty AvenuePittsburgh, PA 15222Tel: (4,2) 338-2615; Fax: (4,2) 281-5788mpetruskaaheinz.org

Jolie Bain PillsburySherbrooke Consulting, Inc.1500 22nd Street NorthArlington, VA 22209Tel: (703) 812-8774; Fax: (703) 812-8775jolie0sherbrookeconsulting.com

Cheryl PolkMiriam and Peter Haas Fund201 Filbert Street, 5th FloorSan Francisco, CA 94133Tel: (4i5) 296-9249; Fax: (415) 296-8842cpolkOmphf. org

Douglas Price135 Franklin StreetDenver, CO 80218Tel: (303) 322-1553 [email protected]

Barbara ReismanThe Schumann Fund for New Jersey21 Van Vieck StreetMontclair, NJ 07042Tel: (973) 509-9883; Fax: (973) [email protected]

' 0

Phil RobinsDept. of Economics, Univ. of MiamiP.O. Box 248126Coral Gables, FL 33124Tel: (305) 284-5664; Fax: (305) 284-2985probins&m iami.edu

Nancy SconyersNational Association of Child Advocates1522 K Street, NW, Suite 600Washington, DC 20005Tel: (202) 289-0777 x 213Fax: (202) 289-0776nancy&childadvocacy.org

Jewel D. ScottThe Civic Council of Greater Kansas Cityizoo Main Street, Suite 23oKansas City, MO 64105Tel: (816) 221-2263; Fax: (816) 221-2209jscott&kcciviccouncil.org

Karen Hill ScottKaren Hill Scott Company6175 Wooster AvenueLos Angeles, CA 90056Tel: (310) 216-2928

Ann SegalDept. of Health and Human Services200 Independence Avenue, SW, Room 415FWashington, DC 20201Tel: (202) 690-7858; Fax: (202) 690-7383asegal&osaspe.dhhs.gov

Rima Shoreiii State StreetBrooklyn, NY 11201Tel: (718) 246-8222; Fax: (718) 246-8220rimashore0aol.com

Susan StantonLa Petite Academy8717 West 'loth Street, Suite 300Overland Park, KS 66210Tel: (913) 345-7658; Fax: (913) 345-9565smstantonOyahoo.corn

Carol StevensonThe David and Lucile Packard Foundation300 2nd StreetLos Altos, CA 94022Tel: (65o) 948-7658; Fax: (65o) 941-2273

BEST COPY AVAILABLE

31

Jan StokleyUniv. of MD Law SchoolSoo West BaltimoreBaltimore, MD 21201Tel: (410) 706-0597jstokleyOlaw.umaryland.edu

Louise StoneyStoney Associates5 Thais RoadAverill Park, NY 12018Tel: (518) 674-5635; Fax: (518) 674-2799Istoney950aol.com

Teresa VastFinancial Aid Think Tank701 Old Mokapu RoadKailua, HI 96734Tel: (8o8) 254-5342; Fax: (8o8) 254-6518tvast&lava.net

Deborah WadsworthThe Public Agenda Foundation6 East 39th StreetNew York, NY 10016-0112Tel: (212) 686-661o; Fax: (212) 889-3461

Margy WallerProgressive Policy Institute600 Pennsylvania Ave., Suite 400Washington, D.C. 20003Tel: (202) 608-1257; Fax: (202) 544-5002mwaller&erols.com

Verna WeberChildhood Services915 SW Harrison DSOB-651WTopeka, KS 66612Tel: (785) 368-6354vsw0srskansas.org

Faith WohlChild Care Action Campaign33o Seventh Avenue, 17th floorNew York, NY 10001Tel: (212) 239-0138; Fax: (212) 268-6515ccacmaincaol.com

Marie YoungThe David and Lucile Packard Foundation300 2nd StreetLos Altos, CA 94022Tel: (65o) 948-7658; Fax: (65o) 941-2273

Lorraine ZippiroliThe David and Lucile Packard Foundation300 znd Street.Los Altos, CA 94022Tel: (65o) 948-7658; Fax: (65o) 941-2273


27

f I-

.:.41........

":"..%e 6

17/

;:.-...---"-- "; - r-/

:,, \t.....

.f

)

Participants' Proposals forNext Action Steps forECE Financing

Before participants arrived in SantaCruz, they were asked to submit a briefproposal discussing what needs to

happen next to generate, explore or test ideasthat will provoke new approaches to financingECE for children ages 0-5. We are sharing theseideas with you because they are fresh andintriguing and because they suggest potentiallyproductive routes to solutions to the ECEfinancing crisis.

Bring preschool education into state law suitswhere the constitutionality of public educationand its financing are being challenged. Theargument is that preschool education is aremedy for the inadequacies of the existingeducation system and that the state fundingis required to ensure that poor children haveaccess to intensive, high quality programs.

Build early education and care investmentaccounts on the existing DCAP by removingthe cap and letting the accounts roll over eachyear. Let people put money in these even priorto having a child so that they can use these to

3

Appendix C

finance parental leave and then childcare/earlyeducation later. The government could contri-bute a 50% match or a match on a sliding scalewith income.

Raise standards so that the minimum educationfor a lead teacher for a child 3-5 years old is a BAwith an early childhood certification or endorse-ment. The standard will drive funding up if classsizes are limited (to 15-18). There must be apublic information campaign supported byresearch to convince the public that real teachersand not babysitters are required.

Bring together all the state finance commissionmembers (see Appendix E) to share ideas and tohear new ideas. Possibly, begin a discussionabout developing a national agenda orminimally, engage commission memberson possible next steps. This will help build asense of movement on a national level, helpcommission members think outside of the box,and get more movement outside of the statesand bring together an impressive array ofleaders for children.

3Stepping Up 7bgether: Financing Early Care and Education in the 21st Century

29

I think it is important to bring together thenational players along with the grass rootsmovers and shakers working on this issue.It has been missing. It is the merging of thethinkers with the doers. Some of the problemswe are dealing with is because people who aretrying to make things happen in their stateshave been isolated from some of the peoplewho are doing the thinking. It would bewonderfully helpful to get together peoplefor an extended length of time to get downto individual "nitty gritty" state politics andoverlay it on a national agenda.

At the federal level: Establish a Presidentialbipartisan commission to identify the amountand structure of public and private investmentneeded to provide good quality child care forall children who need it, as well as realisticeconomic support for parents who choose tocare for infants and toddlers at home. Consider,as a delivery mechanism, a financial aidsystem, similar to that used in post-secondaryeducation, for determining each family's needand distributing aid according to market pricesof the programs parents choose and the cost of

30 parental leave.

At the state level: Organize think tanks orfinance commissions to develop proposals forthe financing of good quality child care forchildren from birth to age six. Proposals shouldaddress parental time with very young children- paid parental leave - as a child care option.Proposals that include universally availablepre-kindergarten programs for 3 and 4-yearolds should address serving this age groupwithin the context of the 0-6 age continuumand a diverse delivery system of private andpublic programs. As part of its task, each state-level think tank should propose a specific rolefor the federal government.

We need to come up with numbers (costs)and a bold, innovative proposal, that includes

4 Appendix C

funding from family contributions, public, andprivate funding sources and how the systemwill work for children and families. It needs toinclude parents being able to stay home withchildren in addition to child care, special needs,Head Start, and parent education. Build anational consensus on this proposal. Pay fororganizers to build public support. Find visibleleaders to help push it. Get support fromwomen's community, faith community,business community, early child developmentcommunity, and health system.

We need hard quantitative estimates of thecosts and benefits of universal ECE financing

under a variety of financing approaches.Different experts have proposed buildinguniversal ECE finance around K-12, highereducation, employee benefit, income transfer,housing, retirement and health insurancemodels. The most desirable method is likelyto emerge from a creative synthesis of aspectsof each of these approaches. Before we candevelop such a creative synthesis, we need acareful examination of the characteristics ofeach of these approaches, detailed specificationof how they could be applied to ECE, analysisof the costs (public and private subsidies) and

benefits (increased utilization of higher quality

care, increased labor force participation, increased

tax payments). We need to be able to estimatebenefits and costs under a variety of differentpolicy parameters and for differentjurisdictions.

Adoption of a universal ECE financing systemwill require improved public understanding andsupport. In order to mount effective publiccommunication efforts, we need a broad rangeof strategic communication planning andresearch. These would include detailed public

34

opinion research to understand the linkageamong different views about the nature of ECEand views about public policy; delineation ofaudience segments based upon their ability toinfluence policy and groupings based upontheir current beliefs and relevant demographicdivisions and political context; developmentand testing of sample messages for eachaudience segment; reaction of differentaudiences to communications efforts mountedin recent years. There is a critical interactionbetween communication research and theconsideration of alternative modes of universalfinance: framing a new policy (alternativefinancing mode) as rooted in meeting educa-tional needs, responding to parents work needs,providing an employee benefit like retirementor health insurance, or improving thefunctioning of an imperfect market likehousing, will have great impact on theacceptability of the proposal. Such framinglanguage should be developed and testedwith audiences prior to launching a financingproposal. Preliminary work in this regardhas been conducted by a partnership includingthe Benton Foundation, the University ofWashington (Human Services Policy Center)

and UCLA.

We need a better understanding of theeconomic dynamics of moving to a higher levelof quality in an entire ECE system (local, state,national), rather than just in a single setting.This would entail answering such questions as:what is the nature and cost of quality indifferent modes of care (informal, family care,

centers); what is the role of parents in quality(e.g., what are the implication of setting training

and competence standards for ECE teachers that

are higher than many stay-at-home parents canmeet?); what will happen to parents' choicesabout cost, quality and location in a muchdifferent financing system, where parents donot have to pay much more for high quality;what are the dynamics by which different

providers at different quality levels willincrease or decrease their enrollment undera universal financing system, and whatoperational and political stresses will becaused by these changes?

A personnel tax on businesses as one sourceof funds, presumably levied at state level. Onevariation on the theme: employers who preferto provide their own child care benefits andmaintain a recruitment edge, could opt outof the tax by providing "sufficient" child carebenefits of their own. The qualifying criteriafor "sufficient" should be high, e.g., subsidizing25-50% of the cost of high quality child care forall employees with children in care. A largecompany could not meet the standard, forexample, by having one child care center. (Therecould also be quality and compensation standards

required of these in lieu employer-provided

programs, e.g., must be accredited, etc.)

The premise is that businesses have a vestedinterest in a good child care system andtherefore are a logical partner in paying for it.The cost of the tax should be covered througha more efficient work force. A tax levied onall businesses is a more even approach thanthe current sporadic offering of benefits byindividual companies, which also disproportion-ately help higher income employees.

NEXT STEPS...

The business community does not yet seechildcare as a business necessity, so such atax proposed now would be premature.

At some point a critical mass of businesseswill "get it" that a better childcare system isnecessary for business reasons. The, I believe,they will prefer to lend their political clout and


31

32

create a more seamless national system ratherthan having to individually create and sustaintheir own complex sets of services. First, theyhave to tire of doing it themselves; that may nottake long.

'Tb achieve critical mass of business leaders who"get" it:

A Create, publish, and publicize a synthesis ofthe data about what individual businessesare losing now from the inadequate childcare system, e.g. what turnover costs them,and the savings that arise when they offerchild care benefits. (A Manual on theBusiness Case for Child Care). Then it mustbe distributed strategically to the businessmasses. The same document could alsoexplain why a "big fix" is necessary. Manybusiness people assume that if child caresupply were increased the whole problemwould be solved.

A Sustain efforts to encourage more employer-provided child care benefits of all typesthrough public policy incentives, tax credits,etc., to push the number of businesses whoare tying to find a way to o I it themselves.The City of Los Angeles gives preference inawarding city contracts to companies withchild care benefits (all else being equal).Companies completing bidders forms arehighly motivated to learn more about childcare benefits. Other public policies includelocal planning ordinances that require childcare facilities in new construction orcontributions to funds.

Child care "Insurance" - my term for a fundthat pays child care expenses. It is like socialsecurity, funded in part by employmenttaxes. Perhaps additional coverage could be"purchased" by families who pay in more eachpay period, like a 401K. It is insurance-like, inthat you don't draw from it all the time, onlywhen you need it. The concept is to spread the

4 Appendix C

payment for child care over a lifetime ratherthan all in at the front end when a family'searning power is lowest. Not sure how tohandle those who don't have children, althoughfull Social Security benefits are not "collected"by everyone either.

Make child development classes, a high schoolrequirement. If child development courses wererequired as drivers' education is currently, thepopulation would presumably become muchmore aware of the importance of the earlyyears. (A worthy goal in itself) Parents who canpay more for child care would hopefully betterunderstand the value of educational care andhow complex it is to create. Programs whoserve higher income parents may thus be ableto charge higher fees and invest the additionalrevenue in salaries, etc. Currently, while manyparents cannot afford to pay more, others couldbut do not understand the value of doing so.

As a footnote, systems that financially supportparents caring for their young children at homeshould also be part of any financing plan. Forexample, the New Jersey's 'Temporary DisabilityInsurance Coverage system cited in FinancingChild Care in the United States, The EwingMarian Kauffman Foundation and The PewCharitable 'Rusts, 1997.

Tax based policies, at the federal, state, andlocal levels are often politically popular waysto help subsidize the cost of child care. At thefederal level, the broad, bipartisan appeal of tax-based approaches is reflected in the numerouschild care bills offered in the last Congress thatincluded provisions that would have creatednew federal employer tax credits, expanded thefederal Dependent Care Tax Credit (DCTC), andmodified existing federal law governing

3 6

Dependent Care Assistance Plans (DCAPs). Thelikely impact of many tax proposals, however,is not fully understood, which makes it hard toargue either for their adoption or for theirrejection in favor of other, more effectivefinancing strategies. The need for more dataand analysis of tax provisions to finance childcare is the context for the following proposals.

Evaluate the impact of employer tax credits,and provide information on the pros and consof this approach to policymakers and advocatesat the federal and state levels. Nineteen stateshave such credits, and legislation to create themhas been introduced in many other states aswell as Congress, but the available evidenceindicates that very few eligible employers haveactually taken advantage of them and that theymay not be a very effective or efficientallocation of public resources. 'It) the best ofour knowledge, the only research that has beenconducted to determine the utilization of thesecredits, and to analyze the reasons for their lowusage, is ten years old and based on limitedempirical evidence. New research on theimpact of employer tax credits would be usefulto advocates and policymakers at both thefederal and state levels.

Evaluate the impact of existing individualincome-tax-based child care strategies: thefederal Dependent Care Tax Credit (DCTC),state DCTCs and other tax-based provisions,and federal Dependent Care Assistance Plans(DCAPs). This means collecting data on whohas benefitted from each of these tax provisions(e.g., number of users, at what income levels;

percentage of eligible users; value of the benefit for

different users), and otherwise analyzing theireffectiveness. 'Ib the extent that data are notavailable - especially at the state level itmeans advocating for its collection. Thisinformation could be used to inform policy-makers and promote changes in these taxprovisions at both the federal and state levels or

37

to support data-based arguments that these taxprovisions are not the most effective way todeliver child care assistance. It might also leadto other strategies, such as renewed efforts todisseminate information on the availability oftax credits more widely to consumers, if lack ofknowledge turns out to be one explanation forunderutilization.

I would recommend a think tank roundtablewith invited papers from experts in financingother analogous systems which ECE folks couldreact/respond to and have another opportunitywhich would invite papers from ECE folksabout necessary elements of a system to beheard and responded to by people who work inthe financing field to respond/react to. Thegeneral idea is to develop a cadre of financingand ECE people to begin work on developingoptions. This will require knowledge fromboth sides.

Support organizational capacity efforts of keyplayers necessary to advocate for neededchanges and decide if there are the rightplayers out there to accomplish goal - is thisanyone's baby - i.e., who will take leadershipon the issue?

Identify and support effective methods ofcommunicating with the public at large aboutthe importance of public support ($) for childcare. (One example: Proposition 10 passed by only

40,000 votes. When one looks at voting patterns in

state, you see how few counties actually supported

the proposition but those that did were the most

highly populated. This has significance for where

one would target resources for an initiative's

passage.)

Stepping Up Tbgether: Financing Early Care and Education in the 21st Century

33

My three ideas for next steps focus onincremental rather than universal financingoptions. They are state- rather than federally-oriented, although there could be a federal roleunder the third cluster. The first two addresstwo current "windows of opportunity."

Explore options for earmarking money thatmay become available as a result of the tobaccosettlement to establish an endowment or otherstrategy to support the long-term financing ofquality early child care and education services.This discussion should include how to makea compelling political case that the moneyshould be used for this purpose rather thansomething that may be more narrowly relatedto public health.

Explore options for using TANF resources (eithertransferred to the child care block grant or not) to

support targeted strategies aimed at low-wageworkers and companies that employ suchworkers. In particular, matching anotherstrategies that leverage private sectorinvestment should be explored.

34 Explore options for improving the quality of theearly care and education workforce (e.g., RhodeIsland's policy to let some child care providers buy

into the state government's health insurance

program, and loan forgiveness programs andscholarships to get people into the field and

encourage further education) and early care andeducation facilities (e.g., incentives for banks toprovide low interest financing for facilities).

I suggest the creation of a network of special-focus, multi-generational consumer coopera-tives and credit unions to enable low- andmiddle-income families to pay for the real costs(i.e., assuming the payment of "worthy wages" to

4 Appendix C

child care professionals and supervisors) of child

care and/or non-publicly financed early careand education for pre-school children.

The child care and parenting cooperativeswhich I envision would become engaged in avariety of community-driven activities focusedon the care and well-being of infants, toddlersand young children. lb help support memberfamilies, the new cooperatives (each serving aneighborhood, city or country) would form anetwork of interconnected, Federally charteredand insured credit unions which would providea broad range of child care- and parenting-related financial services to members. Where amajority of the members earn either less than80% of the average for all wage earners or lessthan 80% of the median household income,these credit unions could also qualify as"community development credit unions." Sucha designation would result in much greaterflexibility in accepting insured non-memberdeposits. The Federal Credit Union Act hasrecently been amended to make it easier forgroups with similar needs to have the"common bond" needed for credit unioncreation. The field of membership for a childcare and parenting cooperative and its creditunion, for example, might be adults inextended families which include childrenbelow the age of 5 or 6. The involvement ofpersons from diverse age groups withinextended families could create the opportunityto provide ongoing intra- and inter-familyfinancial support. For example, such a creditunion might offer some combination of thefollowing child care and early educationfinancing services: traditional savings accounts,Individual Development Accounts (IDA) whichcan be used for child care expenses or loans orIDA advances for the payment of child careand/or early education fees and expenses.

Individual Development Accounts (IDAs) areoptional, dedicated savings accounts managed

38

by community organizations and held at localfinancial institutions. Similar in structure toIndividual Retirement Accounts (IRAs), theycan only be used for housing including thepurchase of a first home, medical expenses,education or job training expenses, orcapitalizing a small business. Assets areaccumulated in these long-term accounts andthe IDA approach invests government andprivate dollars in proportion to the savings ofthe account holders. On a sliding scale, higherincome individuals contribute up to 100% ofdeposited amounts, while impoverished personsreceive substantial subsidies for certaindeposits. However, some level of matchingcontribution by participants, from earnedincome, Earned Income Tax Credits, monthlyincome-support transfers or from "sweatequity," is always required. IDA investmentsare allocated by individuals (and withinreasonable limits, moved by them) among avariety of investment vehicles, including"money market" interest-bearing funds, bondfunds, indexed common stock funds andventure capital funds. IDAs could provide avehicle for families to gain access to affordablechild care and early education.

A major problem for families in need of childcare is that the need for funds to pay for childcare or early childhood education usuallycomes early in the income or earnings cycle ofthe family. Often there is little time over whichsavings can be accumulated. The cooperative/credit union model which I envision wouldpermit families to spread the cost of child careover a much longer period of time and, thus,take advantage of the higher income year whichare to come. Thus, family members whocurrently do not have enough income orsavings to afford child care could be matchedwith older family members in a better positionto provide assets and collateral such asretirement funds. For example, funds for childcare loans could then be secured using older

39

member's retirement funds, and in turn theolder member could secure future loans onlong-term care, etc., secured through thosesame pooled resources.

Somehow, a ground swell must grow that

convinces the general population that providingquality early care and education to young childrenis vital. Much is being done to help this along, but

the movement must become more widespread.Most young families still do not realize how

important the early years are to their children'sfuture success. We should examine how otherfields achieved needed change. For example,

when looking for care for their elderly parents,children now haye an idea of what to look for -possibly because they have more "choice" ofquality programming from which to choose.

We could begin the process for early care and

education by focusing on how to improve qualitychoices for low-income families and by taking a

close look at how the military accomplished itsgoal of improving quality and accessibility for the

armed forces. Some specific ideas are:

A Public investments in child care havean impact on the entire system. Tb besuccessful, public policy should ensure thatproviders committed to serving low-incomecommunities have sufficient long-termfinancial stability to support quality childcare and attract new leaders to the field.

A Public policies should be examined to

determine whether they hinder thedevelopment of quality programs. Forexample, states set reimbursement ratesfor child care well below the cost of providingquality services. At the same time, advocatespress for higher quality and systemexpansion without addressing the fiscalimplications of higher regulatory standards.


35

36

4 Appendix C

A More policies should be developed thatencourage pooling of public funds toimprove accessibility of quality early carand education for low-income children.Examine the work of the Child Care andHead Start bureaus in encouragingpartnerships. Some states have encouragedpartnerships utilizing Chapter I dollars anda few are looking into partnerships withEarly Head Start. More needs to be donewith other departments to really createmeaningful pooling of funds to enablecommunity-based providers serving low-income families to access resources. "BestPractices" for financing child care should bewidely disseminated to the field and topolicy makers through written documentsand presentations at conferences (not justconferences in the education field!).

Encourage development of grass roots capacityfor advocacy, discussion, and ideas to improvefinancing. Participation in the policy dialogueby the most talented members of the directservice provider community is critical to thefuture of child care in this country. lb° often,policies are developed without meaningfulinput from those who will be most affected.The result has been policies that haveundermined quality and the ability of the filedto retain practitioners with potential fordeveloping great programs. Providers who havethe ability to think globally must be identifiedand engaged in discussions; their leadershipcapacity must be developed through real-lifeopportunities after formal training is completed.

Select 25 communities where fundingpartnerships apparently work, ascertain whatmakes it work and widely disseminate theresults. Use philanthropic dollars and influenceto encourage the private and public sectors toencourage capital investment in early learningfacilities to take quality practices "to scale."

While financing is a key part of the discussion,I don't think financing is the central issueneeding resolution. Financing would be easierto address if there was a broadly shared visionof what a system of accessible, affordablequality early care and education for all childrenshould look like and if there was a broadlyshared political consensus that such a systemwas desirable. While I understand that thecentral focus of this meeting will be financing,I hope that part of the agenda will also bedevoted to discussing what a system shouldlook like; otherwise, it may be difficult to havean effective discussion of financing without anagreement on what is being financed.

Assuming agreement on a system, I think themost effective strategy is to identify a state orgroup of states where the fiscal and politicalenvironments are most promising, and seekto initiate the desired system on a state or sub-state basis. This should be accompanied by acoordinated effort to generate public interestand excitement in other states, and to raise theprestige and status of the state or states thathave taken the lead. I think the greatestpotential for progress in advancing systems ofearly care and education will be in individualstates rather than at the federal level, becauseeducation policy is largely under state controland because most key child care decisions arestate decisions under the federal block grantstructure. The recent election successes oflottery initiatives emphasizing use of funds foreducation and of the California early educationinitiative suggest the potential viability ofattaining dedicated funding for early educationefforts. In addition, the current fiscal climate instates (strong economies, state budgetsurpluses, unspent TANF funds, and tobaccofunds) provides an unusually promisingopportunity for initiating new state efforts.

One component of a funding strategy thatmight be helpful in all states could be to

40

generate a national campaign around potentialuse of the TANF surplus. The annualizedsurplus now appears to be in the range of $3-4billion or more, and a number of states arehaving difficulties deciding how or whether tospend it (and are also having difficulties deciding

how to satisfy their maintenance of effort

obligations, which total $10 to $11 billion). On an

ad hoc basis, a number of states have shiftedsome of the resources to child care, but it mightbe helpful to generate greater awareness of themagnitude of the unspent funds, along with aneffort to frame the importance of shifting asubstantial share of newly freed-up resources tostate early care and education systems.

Leveraging of federal, state, and local dollarswith corporate and private dollars to create aweb of financial support for quality early careand education.

Step 1: The American public needs true buy-into early care and education. They need tobelieve it is a solid investment for theirs and thecountry's future. Several programs need to bebacked by research so that they are successful.They then need to be marketed better.

Step 2: In addition, further exploration andmarketing of true costs for accessible,affordable, quality early care end educationneeds to be done with the aspects of qualityearly care and education (teacher retention,class size, provider/child ratios, etc.) explained,assigned a cost, and given a projected futuresavings account so that the public understandsand supports true early care and education.

41

One way to support the financing of good,affordable early childhood services would beto work with state leaders who can play a keyrole in funding and coordinating child careservices with pre-kindergarten systems. Theeffort would identify promising approachestoward funding and programs activities andwork intensively with several states consideringsuch policies. The system components thatneed coordination include funding sources(federal, state, local and private sector dollars),administrative structures and rules, andoversight and evaluation practices andprocesses. As sates achieve better systemscoordination, policymakers will have a greaterunderstanding of needs and how to targetresources so the state can make the mostof available programs.

The coordination work would include surveyingstates about their laws and financing strategies,producing an analysis of the effects of statutoryand funding provisions on programs, andlinking legislators, governors' staff, key agencyand program administrators and communitystakeholders through meetings that includeplanning and action sessions. These activitieshave high potential for establishing creativepartnerships that could prompt action,particularly by reaching understandings thatreveal common interests. An examination ofhow to access other relevant funding streams,such as child health, business or school funds,could bolster this effort.

Second, a focus on quality care and educationis essential to producing good effects forchildren and their families. lb achieve a qualitysystem, it is critical to disseminate researchfindings as well as program and policyexamples to a range of people who representseveral key sectors. Policymakers, administra-tors, practitioners, businesspeople and parentsare key interest holders that must have astrong understanding of effective approaches


37

and standards in order for quality programs tobecome institutionalized. By connectingnational experts and scientific researchers andtheir work with these interest holders,information can be translated into practicesand policies. The information exchange canbest work when presented in terms so thateach of these stakeholders can process theinformation, whether described verbally or inwriting or both. This means that information togovernment officials should be comprised ofthe impacts on public spending and revenue,cost/benefit data, and access to other fundingsources. Information presented to earlychildhood providers should contain issues thatare pertinent to them, such as costs of care,reimbursement, standards, financing andcareer development. When sharing informationwith parents, it is important to respect theirautonomy and value systems while givingthem tools to enhance their child'sdevelopment. Arranging for peers tocommunicate information can improve how itis understood and implemented.

Third, adding business resources to child care38 and early education programs, policies and

public awareness campaign is a strategy thatcould increase access to affordable, qualityservices. lb increase employer participationin early childhood issues, a concentrated effortmust show business leaders what is in it forthem. 'Ib accomplish this, briefings betweenbusinesses and policymakers would beorganized. This specific format wouldencourage businesses to participate becauseof access to key policymakers. Some of thepolicymakers, whether representing thefederal government, a governor, a legislatureor locality, would discuss reasons whybusinesses have an interest in supporting thisissue. For effective communication, otherbusiness leaders would join policymakers inpeer-to-peer discussions with business leaders.

4 Appendix C

In persuasion efforts, policymakers and otherwould use verbal and written approaches toimpart facts that show why businesses shouldpay attention and contribute to good child careand early education. These would include bothshort and long range interests. In the shortterm, critical data would be presented aboutmore working parents with preschool-agechildren and the effects of child care problemson employee turnover, absenteeism, andproductivity. In the long term, research wouldbe shared with business leaders about childrenwho participate in good early educationprograms having better job skills and educationachievement compared to those who did notparticipate in such programs. Specific examplesof business involvement in early child carewould be provided. Goals of this project wouldbe a system where businesses not only investmoney and other resources to early childhoodservices but also mentor early childhoodproviders about good business practices.

First, "lb ensure that all families can access andafford quality early care and education for theirchildren," your stated objective, it is proposedthat the federal government make an adequateinvestment in a voucher system that willsubsidize families, based on a sliding subsidyschedule that provides virtually 100% subsidy forfamilies at or below the poverty level, with lessersubsidies for higher income families, cutting offat about $60,000 annual income per year. In ourcalculations, we suggest that no family pay morethan 30% of their disposable income above thepoverty level for families of a given size. Familieswould be required to purchase licensed servicesand the program would allow for higherreimbursement to providers of good qualityservices. We calculate that the cost of such avoucher system would be in the range of $40-50

42

billion per year depending on the incentivesbuilt in to improve quality. The proposal alsoincludes adequate funding of state enforcementof minimum licensing standards. This sort ofprogram and funding level is necessary if we aretruly intent on giving all families access toreasonable quality, affordable ECE services.Unfortunately, serious consideration of programssuch as this one involving massive publicfunding increases has been absent from ourdebate within the ECE advocacy community.Instead, we focus on short-run reaction toinadequate Congressional initiatives that arepragmatic attempts to work within a politicalenvironment that has been framed by theconservative social agenda. This is the time tostart working toward a complete solution to thechild care problem early in the next millennium.

Second, to justify major, sustained increases inpublic ECE spending it is necessary, over thenext five years, to provide the public with acost-benefit analysis indicating the benefits ofsuch an investment in the quality of children'searly lives and education. We can estimate thecosts easily enough, but we do not have theinformation necessary to estimate the benefits.The national research agenda should beprioritized to supply the information needed.

Third, early care and education involveshighly personal choices and requires localresponses and ingenuity to satisfy parents'needs and desires for their children. Financingthese local initiatives to encourage a floweringof good practice is crucial and will onlystrengthen any strategy to provide goodquality services to all children. Thephilanthropic community, possiblygovernment agencies, should also help provideaccess to information about these strategiesand practices. As well as ingenious ways offinancing improved quality. Fundingapproaches need to be evaluated for their long-run effectiveness of maintaining funding levels

43

that truly institutionalize the promisingprograms. What funding approaches work?

Inadequate training and compensation ofchild care personnel is a major impedimentto improving quality. How can ECE personnelbe professionalized and should they be?

Determine the Actual Cost of the Early Care and

Education System (Funding Levels Needed)

There is no definite idea regarding what itwould cost to fully fund an early care andeducation system. The first step the field needsto address is what constitutes the early care andeducation system. More precisely, does the filedfeel that early care and education includes carefor children birth to five, three to five, birth toeight?; does it include comprehensive servicesfor all children or just those who need them?;does it include infrastructure or simply directservices? The second step is to discern what theappropriate levels of funding are for whatservices. The third step is to calculate utilizationrates (included projected uptake rates). Thefourth step, using the above information, is tocompute the cost under differing conditions.

Access Different Domains Where Services are

Universal or Near-Universal (Potential Funding.

Mechanisms)

There is an urgent need to examine differentfinancing mechanisms that are used in theUnited States to support universal or near-universal efforts. Such efforts include HealthInsurance, Social Security, Transportation,Education, Libraries, etc. The field has alreadyhad outstanding work done in the area ofHigher Education. Similar efforts are neededin other domains.

Stepping Up Thgether: Financing Early Care and Education in the 21st Century

39

Mount Cross-National Work to Discern Other

Nations' Investments in Early Care and Education

and Perhaps Compare these Investments withOther National Performance Data (e.g., TIMMS)

While the United States has a totally uniquepolicy ethos regarding the funding of services toyoung children and their families, it isimportant to discern what other nations havedone and are doing regarding their financingstrategies and commitments. This informationshould be helpful as the field considersalternative strategies. It would be particularlyhelpful if high early care and investmentnations also had high performance in otherdomains deemed important by policy makers(e.g., education, economy). Such an analysisshould be completed (perhaps as an add-on oradd-in to the OECD international Policy Study),with the findings popularized.

Mount Public Information and Advocacy

Campaigns Regarding the Costs and Benefits

of Early Care and Education Investments

The American public must have a better

40 understanding of why such investments pay off.We have the data now. It needs to be more widelypopularized, with some Madison Avenue (orWashington, D.C.) sloganeering. Sound bites,

effective non-field-based spokespersons, and amobilized advocacy community would helpdramatically. This effort could beginimmediately, with staged releases of information,

including some of that discussed above.

We should try to pilot new financing schemesin 4-6 localities or states that already have asolid set of program and policy reformsunderway. This would mean doing tailoreddesign work with state and local officials,

4 Appendix C

scholars, advocates and others in the local sites.The goal would be to develop a high quality,universally available set of ECE programs. Thedesign teams might concentrate on differentparts of the financing puzzle and be connectedto a national group that would develop more ofa "composite" plan. See below.

We should attempt to establish a nationalfinancing commission or work group that would

work with the local/state reform groups to culllessons learned from these and other "pilots"and to make proposals for what governmentand the private sector might do in key areas:subsidies/general program revenue, qualityfunds (salaries, professional development, consumer

info) and facilities ("off-budget') etc. This group

should have strong ties to business leaders.

We should develop project to study family leaveas a viable part of the ECE system. A criticalexamination of what partial wage replacementcosts in the 5 states in which family leaveoperates and how well utilized it is would bea helpful start. Then a team of economists,political scientists, and others might establishother options for national and state policyreforms to ensure partial wage replacementfor parents who wish to stay at home to nurturea young child.

What is it we want to finance? Here we havebeen stuck between half day "pre-school"programs that are designed for children and fullday "child care" services that are designed forworking families. We need new images thattranscend these dichotomies. We need to look

at other examples. In particular, we need toconsider how early childhood services have beenfunded in other countries (i.e., the combination of

family leave, infant care and pre-schools in France).

44

How do we structure the financing? Recentpapers on financing (Stoney, 1998; Vast havebeen primarily focused on how we structure thefinancing of early childhood services. We needto take each of the suggestions and promotemore in-depth discussion and perhaps somedemonstrations using various models (K-12model, higher ed, health care). Each model must

include mechanisms to ensure adequatecompensation for staff.

How do we increase public will to invest inearly childhood? The bottom line is how can weget more money into the early childhoodsystem. Naturally this is directly related to themessages we send about "that" we are going tofund and "how." Much more attention needs tobe paid to advocacy efforts that are focused onimproving policies. Foundation funding isneeded to support national organizations andstate and local groups advocating for increasedpublic funding.

Funding sources pay more for higher quality care.

Explicit goal for all children, not the poor or"working poor." Those children who can affordit will pay full price. Those who can't will payon a national formula.

'Raining and quality improvement dollarsavailable to providers.

Evaluate pre-k initiatives - especially in thosestates moving toward universal access todetermine: utilization by families at varyingincome levels; impact on children's cognitive

45

and communications skills; and impact onexisting, community-based early childhoodprograms/child care and Head Start.

Evaluations should include descriptions ofthe initiatives: total new funding, sourcesof funding, investments in facilities andprofessional development, standards.

Fund selected number of multi-issue state-widechildren's advocacy organizations to test strategiesfor generating new public revenue or allocatingadditional revenue for early care and education.

Thin children's advocates, early childhoodproviders and educators to enable them toframe the financing issue and trade-offs moreeffectively and to build their capacity toparticipate in policy discussions about earlychildhood education financing.

I have been a long-time advocate of expanding thefederal child care tax credit as an effective meansof financing child care. I would make the credit

refundable, increase the maximum credit to 80percent of expenses (up to a limit, depending on the

type of care), phase the credit out at higher income

levels, and require the provider to be licensed (orregistered). I would also provide a smaller

refundable credit for parent care for childrenunder the age of one (similar to the Clinton

proposal). I would also favor limited funding for

training child care workers and perhaps even

subsidizing child care worker wages. Finally, I

would expand subsidies to businesses that provide

child care services for their employees and wouldmake low-interest loans available for starting child

care centers. Generally, I favor providing

incentives for individuals and businesses topromote high quality care.


41

Passage of federal and/or state legislation suchas the Federal Administration Early LearningFund (in the President's Budget) to allow funds to

flow to communities for innovative approachestoward improving quality for care for 0-5 yearolds. This should be results-based with trackedtrends and drive new collaborations withincommunities (e.g., between health/mental health

providers and early childhood programs).

Providing much more information and examples

about the effects of low quality care on child

development (including brain research and the lack

of a strong labor force) but tied to steps that can be

taken to ensure high quality. This is research andpractice based. This should be done by every level

and include the media and business and religious

groups. This needs much more than the RobReiner activity although that is important. This is a

concentrated campaign targeted to parents andeveryone else. Information can be gathered from

government and private research but a campaign

will have to be private.

Arm advocates, legislators, interest groups, etc.,with strategies such as California's tobacco tax

42 proposition, the Florida counties' model, theKansas City "Is it good for kids?" campaign, theColorado cardboard children, etc. Innovative,successful funding strategies need to becarefully documented and how-to materialsneed to be disseminated widely. This is a goodprivate effort business, media, foundations.

Support New Federal and State Legislation

We need to develop stronger public financetools that make feasible greater private sectorinvestment in the financing of early care andeducation. Leadership in support of these toolscould come initially from the sectors andindustries most affected by the needs of

4 Appendix C

working parents for example, hospitality,health care, and other industries and sectorswith a growing, lower wage workforce. Theearly care and education field should mobilizethe private sector in support of federal and statelegislation that: Creates much more powerfultax credits for pooled corporate contributionsand investments in early childhood facilities(local or regional child care equity funds). Existing

child care tax credit models (for example,California's) are ineffective because the creditis too weak (only 30% of the contribution); there

is no mechanism for pooling of contributionsfrom multiple businesses to create a localequity fund; the restriction that the supply-building product must benefit the employees ofthe donor does not reflect the realities of thechild care market; and, it lowers the cost ofprivate sector lending to the early care andeducation field to meet its capital needs.

Defining the Field as an Industry and Every

Provider as a Social Enterprise

In order to support the field's utilization offinance tools that function as "investments"and "loans" rather than grants, every providerneeds to embrace an identity as a "socialenterprise" that is part of a recognized andgrowing "industry" with the ability to respondto changing market forces, to utilize public andprivate sector financing tools, and to broker acomplex mix of public and private resourcesto create quality programs for children. A socialenterprise can function as part of a publicsector agency, as a nonprofit organization, oras a for-profit business. It is characterized byan ability to achieve a measurable social andeducational goal that promotes human andcommunity development, while operating withreference to the financial bottom-line in a waythat generates an expanding pool of privatesector and public sector investment in theindustry. In order to promote this self-concept,the field should take steps to:

46

.6. Define and measure itself as an importantand growing industry in the local economy,that must be supported to grow in veryspecific ways in order to help the localeconomy achieve appropriate andsustainable growth.

A Support provider education in marketassessment, management, financing, andother elements of small business training,appropriately tailored to the different typesof social enterprises found in the industry.

A Direct the efforts of local planning councils,resource and referral agencies and otherlocal and regional intermediaries to the taskof helping providers in every neighborhoodposition themselves effectively in relationto the "market," and where the marketconsistently fails to produce appropriatekinds of supply (infant care, for example),

intervening with appropriate investmentsand supports to address specific marketfailures.

Making the Market in Low-Income Neighborhoods

The formal child care market in many low-income communities is disorganized and under-utilized. Well-intentioned community efforts toincrease one type of supply (e.g., Head Startcenters or informal care givers) are often madewith little or no attention to entirely predictableimpacts on other kinds of supply. Consumersdo not fully utilize available "demand side"subsidies to their maximum benefit, andwithout tremendous organizing, are not ableto cause the power of their demand sidesubsidies to create programs that addressspecific "market failures." Regional and localintermediaries should devote more effort toneighborhood-based, market-oriented, resident-driven planning for comprehensive early careand education in defined low-incomecommunities that:

A Mobilizes consumers to define the directionsin which the community market for early

4

care and education should be supported togrow.

A Mobilizes consumers to utilize all availabledemand side subsidies to purchase qualityservices.

A Helps providers make informed andcoordinated decisions about how to targetand/or expand their enterprises.

A Builds sustainable community enterprisesand institutions that take advantage of alllocal, regional, state, and federal tools forinvestment and quality-enhancement.

A look at tax policy with the goal of developingnew tax policies (to replace the DCTC) that cangenerate significant sums for the early care andeducation industry (e.g., direct subsidies forprograms and facilities) as well as subsidies thatcan effectively impact consumer behavior andlower the cost of child care for families. Firststep is careful research on potential approachesand then dialogue with experts in tax policy aswell as leaders in ECE.

A look at how to provide paid parental leave forlow and moderate income families, using socialinsurance strategies such as 'ThmporaryDisability Insurance, unemploymentcompensation, etc. Again, I think the approachshould be research followed by dialogue withexperts in disability insurance, unemploymentcompensation, etc.

Facilitate new and challenging discussions withthe federal Head Start Bureau, the federal ChildCare Bureau, and the federal Department ofEducation about re-structuring the system tocreate a coordinated strategy for combiningdirect aid and portable aid for early care andeducation. This is very politically risky and likelyto engender a lot of turf battles. But someone has


43

to do it! And we need a powerful, non-investedentity to lead this dialogue. Perhaps the privatesector could play an important role here. Thebottom line is that we will always be "tinkering"until we address the very institutions thatperpetuate our divided system.

Unify a vision and approach(es) to financingthat have the greatest potential to achieve thegoal of making high-quality early care andeducation accessible and affordable to allfamilies with young children. 'lb accomplishthis, identify an organizational home forsupporting, coalescing, and furthering financingefforts of national organizations, researchers,government entities, and state commissions.The home should have the capacity andcredibility to provide leadership and to carryout these activities:

A Convene researchers, advocates andorganizations focused on generating

44 financing solutions;

A Coordinate regular meetings of a coregroup of researchers and leaders toinvestigate financing ideas in a cooperative,collaborative way;

A Attract and share resources for researching,designing, testing, and promoting an earlycare and education financing system.

A Identify data needs and work to establish ormodify current data systems as necessaryto collect and supply data regarding needand unmet need for services, quality ofservices, etc.

A Support the establishment and/orcontinuation of state and/or communitylevel financing commissions by conveningleaders from states' financing commissions

4 Appendix C

or other financing efforts to explore andlearn from the various approaches usedto ignite interest and to identify andimplement solutions, and by providingongoing support to the state commissionswith resources and a central point ofcontact for networking and up-to-dateinformation about current financingresearch and pilot-testing.

. Support the establishment and work of anational commission on financing earlycare and education.

Establish a national commission charged withexamining potential financing approaches andworking together with state commissions incrafting complementary state and nationalsolutions. The national commission could beestablished by Congress, the President, and/orby leadership in the private sector. The statecommissions would work with the nationalcommission toward a national consensus oncoordinated financing strategies. With theencouragement of the state commissions, thenational commission would develop a financingaction plan and recommend it to all sectors.

Support research efforts and pilot-test aspects ofthe higher education approach to financing andfinancial aid, including:

A Produce a presentation/discussion packagefor states and local groups to use inexploring the higher education financingmodel.

.6. Research aspects of higher educationfinancing such as pricing, financial aidadministration, setting up endowmentfunds, and developing a nationalorganization of organizations.

.6. Develop a need analysis methodologyand a model financial aid service for pilot-testing.

A Convene staff of Administration for

48

Children and Families and the U.S.Department of Education's Office of Post-secondary Education to explore thepotential application of methods used inmanaging federal funds for post-secondaryeducation (aid to institutions and aid to

students) to use of federal funds for childcare and early education.

In the 1996 welfare law, Congress freed states tocreate a "seamless web" of child care servicesby combining four programs targeting specificpopulations into a single, flexible, block grant.At the same time, Congress eliminated theguarantee of child care that had existed forworking welfare recipients and those in the firstyear of transition from welfare to work. Finally,Congress, with significant prodding from theadministration, increased the funding level forchild care well beyond what had ever beenspent by states in the past.

Despite the increase in federal funds, and moreflexibility in administration, states continue tofind that they are unable to serve all workingpoor families and an number of states havenot created seamless and equitable systemsof child care assistance. States cite a lack ofadequate funding and a need to focus resourceson families transitioning from welfare to workin order to meet work participation require-ments under the Welfare Law. Congress shoulduse the leverage of federal funding and the taxsystem to address this issue.

First, Congress can increase funding for theChild Care and Development Block Grant andrequire that states maintain state spendingwhile taking steps to create a seamless systemof child care assistance that treats all workingfamilies equitably in order to access the newfunds. When the Bock Grant is reauthorized in

49

2003, all states should be required to have aseamless system in order to be eligible forthe federal funds. States need flexibility andresources to address outreach, quality andcapacity gaps in the child care system and todevelop out-of-school time programs for the fivemillion children currently left home alone afterschool. All of these goals should be addressedby both increasing the Block Grant as thePresident has proposed, and by redirecting tothe Block Grant the $9 billion in smallerinitiatives he recommended.

Second, federal tax policy should include arefundable tax credit for working poor familieswith young children. The existing tax credit forchild care expenses is available to householdsof all incomes, but does not benefit low-incomefamilies without sufficient tax liability to takeadvantage of a non-refundable credit. ThePresident is right to propose increasing the taxcredit to reflect current cost of care; however,the administration proposal does not target thelowest income families and is not refundable.

Employers need to become better educatedabout the economic impact of not having childcare available for employees and the fiscalimpact of the child care profession in localcommunities. There is a need for a handbook tobe used by policy makers, Child Care Resourceand Referral, child care providers and advocateswhich would be used to sell local employersand other funders on the importance of highquality child care. It would be good to have partof the handbook be a worksheet with a formulaidentified which could use information pluggedinto it from the local community to identifyeconomic impact for that community. Havingall this information in one place would helpanyone who is using this. States could be


45

involved in facilitating meetings across the stateto use this material as a training tool for thegeneral public, legislators, local funders, etc.

A group of financing experts needs to be calledtogether at the state level to form a task force to:

A Identify barriers to being able to supplyhigh quality child care

a Identify all child care going on in state andwho is funding it

a Identify all possible funding options writelegislation to create funding streams suchas taxes, lottery funds, tobacco funds, etc.

a Bring recognition to the general public thatchild care issues are an EconomicDevelopment issue not a welfare issue

a Do training throughout the state aboutpossibilities for identified funding

A Create tax credits for businesses whoestablish child care settings

a Propose funding accounts with taxincentives for donations to fund child care

46 for employed parents.

a Develop a way to offer incentives for childcare providers who do not earn at leastwhat a classroom kindergarten teacherwould make. This would involve severaloptions which could include one time lumpsum payments for staying in a position forsix months to a year, earning CDA's ortaking extra training. A project such as thiscould be funded by CCDF funds, privatefunds from foundations and businesses, andby state tax dollars. The federal governmentcould be involved by offering incentives tostates who develop a program like this andby requiring this type of incentive programor a minimum of at least a CDA for childcare givers; they also would have to providepartial funding. The state would beinvolved by either contracting out the

4 Appendix C

administration of this program oradministering it themselves, and localgovernments might also be involved byadministering or putting local funds intothe project to help with the cost.

I believe the most important next step is toprovide an infrastructure in which new ideascan be generated, tested or explored. Rightnow, a combination of scattered individualsand organizations take interest in aspects offinancing on a relatively ad hoc basis, withouta coordinated sense of strategy, priority orneed. The field needs to define what Dr. PeterSenge calls a "shared mental model" as aproposed overall architecture. (An exampleof this is the visual model proposed in IbresaVast's Minnesota report.) 'Ib get to this point,some organization needs to act as convener,catalyst, and communicator to the field on anon-going basis on issues and ideas related toearly education financing. One possibilitywould be to enable an organization like theChild Care Action Campaign (CCAC) to playthis role as it has in that arena of communica-tions and media, through its role as leader ofthe Media Strategies Group over the past fiveyears. The field accepts and trusts CCAC insuch a role. This would allow the attainmentof new knowledge, and proposals resultingtherefrom, to be continuous, connected andfocused. In essence, this would provide "staff'to the issue.

'Ib support a designated staff organization, andextend the infrastructure, a national advisorybody of some sort should be created, to provideguidance and expertise to the staffs work. Thiscould include economists, finance experts,bankers, representatives of other fields fromwhich lessons can be drawn, and other who canprovide the thinking necessary to transform the

50

way early care and education is financed. Iwould not make this a government body butrather situate both the staff and advisory bodyin the private non-profit environment.Representatives of government and the for-

51

profit sector should be included as advisorymembers. These two steps create a foundationon which other next steps and new approachescan be built.


47

The Foundation:A SelectedBibliography of ResearchRelevant to ECE FinancingPublished Since 1990

Blank, H. and Poersch, N. 0. State Child Care and EarlyEducation Developments, Highlights and Updates for1998. Washington, D.C.: The Children's Defense Fund, 1999.

Blau, D., ed. The Economics of Child Care. New York:Russell Sage Foundation, 1991.

Brandon, R.N. and Naito, C.V. Financing Quality ChildCare in Washington. Seattle, WA: Human ServicesPolicy Center, 1997.

Case Studies of Public-Private Partnerships forChild Care. Washington, D.C.: The Child Care

Partnership Project, U.S. Department of Health andHuman Services, Administration for Children andFamilies, Child Care Bureau.

Cleveland, G. and Krashinsky, M. The Benefits andCosts of Good Child Care: the Economic Rationale forPublic Investment in Young ChildrenA Policy Study.Toronto, Canada: Department of Economics, Universityof Toronto at Scarborough, 1998.

Cost, Quality and Child Outcomes in Child CareCenters, Technical Report. Cost, Quality and OutcomesStudy Team. Denver, CO: Economics Department, Center

for Research in Economics and Social Policy, Universityof Colorado, 1995.

Effective Language for Communicating Children'sIssues. Washington, D.C.: Coalition for America'sChildren and the Benton Foundation, 1999.

Fact Sheets for Public-Private Partnerships forChild Care. Washington, D.C.: The Child Care

Partnership Project, U.S. Department of Health and

Human Services, Administration for Children andFamilies, Child Care Bureau.

53

Appendix D

The Future of Children: Financing Child Care. Centerfor the Future of Children. The David and Lucile PackardFoundation, vol. 6, no. 2, Summer/Fall, 1996.

Galinsky, E., Howes, C., Kontos, S. and Shinn, M. The

Study of Children in Family Child Care and RelativeCareKey Findings and Policy Recommendations.Young Children, November,1994.

Greenberg, M. H. Spend or Transfer, Federal or State?Considerations in Using TANF and TANF-RelatedDollars for Child Care. Washington, D.C.: Center forLaw and Social Policy, 1998.

A Guide to Public-Private Partnerships forChild Care. Washington, D.C.: The Child Care

Partnership Project, U.S. Department of Health and

Human Services, Administration for Children andFamilies, Child Care Bureau.

Kagan, S.L. and Cohen, N. Not By Chance: Creating anEarly Childhood System for America's Children, FullReport, The Quality 2000 Initiative. New Haven, CT:The Bush Center in Child Development and Social Policy,

Yale University, 1997.

Karoly, L., Greenwood, P., Everingham, S., Hoube, J.,

Kilburn, M.R., Rydell, C.P., Sanders, M., and Chiesa, J.

Investing in Our Children: What We Know andDon't Know About the Costs and Benefits ofEarly Childhood Interventions. Santa Monica, CA:RAND, 1998.

Knitzer, J. and Page, S. Map and Track: StateInitiatives for Young Children and Families. NewYork: National Center for Children in Poverty, 1998.


49

Michalopoulos, C. and Robins, P. K. Employment andChild Care Choices in Canada and the United States.Coral Gables, FLA: Department of Economics, University

of Miami, 1999.

Mitchell, A., Ripple, C. and Chanana, N.Prekindergarten Programs Funded by the States..New York: Families and Work Institute, 1998.

Mitchell, A., Stoney, L., and Dichter, H. Financing ChildCare in the United States: An Illustrative Catalog ofCurrent Strategies. The Ewing Marion KauffmanFoundation and The Pew Charitable Trusts, 1997.

NICHD Early Child Care Research Network. Child

Outcomes When Child Care Center Classes MeetRecommended Standards for Quality. AmericanJournal of Public Health, v. 89, no. 7 (July 1999):

1072-1077.

Peisner-Feinberg, E., Burchinal, M.R., Clifford, R.,

Yazejian, N., Culkin, M. L., Zelazo, J., Howes, C., By ler,

P., Kagan, S.L., Rustici, J. The Children of the Cost,

Quality, and Outcomes Study Go To School. ChapelHill, N.C.: Frank Porter Graham National Center for Early

Development and Learning, University of North Carolinaat Chapel Hill, 1999.

Profiles of Public-Private Partnerships for ChildCare. Washington, D.C.: The Child Care Partnership

Project, U.S. Department of Health and Human Services,

Administration for Children and Families, Child CareBureau.

Rohacek, M. and Russell, S. Child Care Subsidy: An

Investment Strategy for North Carolina. Carrboro,N.C.: Day Care Services Association, N.C. Rural Economic

Development Association, N.C. Justice and Community

Development Center, 1996.

Ryan, E. and Sciamanna, J. Meeting the Child CareChallenge: State Child Care Status Survey.Washington, D.C.: APWA, 1998.

Sawhill, I. V. Investing in Children. Washington, D.C.:Brookings Children's Roundtable Report, no. I, 1999.

Schlick, D., and Zaffiro, J. The Other Side of the ChildCare Story: Economic Trends and the Need for ChildCare Subsidies. Ramsey County, MN: Ramsey County

Human Services Department, 1996.

5 Appendix D

State Family-Leave Income Initiatives: Solving theProblem of Unpaid Family and Medical Leave.Washington, D.C.: National Partnership for Women E

Families, 1999.

State Spending Under the Block Grant, MIS FactSheet. Washington, D.C.: U.S. Department of Health

and Human Services, 1998.

Stebbins, H. Improving Services for Children inWorking Families. Washington, D.C.: National

Governors' Association, 1998.

Steinschneider, J., Donahue, E. H., Campbell, N. D., and

Williams, V. L. Making Care Less Taxing: ImprovingState Child and Dependent Care Tax Provisions.Washington, D.C.: National Women's Law Center, 1998.

Steps to Universal Prekindergarten Guidebook,Volume II: A Resource for Superintendents, SchoolBoards, Prekindergarten Policy Advisory Boards,Teachers, Early Childhood Professionals,Policymakers, Parents and Citizens. Albany, NY:State Communities Aid Association, 1998.

Stokley, Jan. Early Childhood Facilities Tax CreditOptions. Forthcoming.

Stoney, L. Looking into New Mirrors: Lessons for EarlyChildhood Finance and System- Building. HorizonInitiative, 1998. (Available only through the NationalChild Care Information Center, 1-80o-616-2242.)

Tax Relief for Employed Families: Improving theDependent Care Tax Credit. Washington, D.C.:National Women's Law Center, 1999.

Vast, T. The Postsecondary Financial Aid System:

Potential Strategies for Early Care and Education.Washington, D.C.: National Association for theEducation of Young Children, 1997.

Whitebook, M. Making Work Pay in the Child CareIndustry: Promising Practices for ImprovingCompensation. Washington, D.C.: Center for the ChildCare Workforce, 1997.

1999 Data on Child Care Salaries and Benefits in theUnited States. Washington, D.C.: Center for the ChildCare Workforce, 1999.

54

State Commissions SupportingECE Financing

Appendix E

Below is a list of the state-level commissions that support work in the area of ECE financing, including contactinformation. Many thanks to the National Child Care Information Center (NCCIC) for compiling the list.

AlaskaA According to the State Child Care Plans submitted

October 1, 1997:

In Alaska, local associations of Business andProfessional Women, local Chambers ofCommerce and major employers will be invitedto participate as members of an independentcommittee to examine the financing structuresfor child care and early education from abusiness point of view.

Contact:Mary LorenceChild Care Program CoordinatorAlaska Department of Health and Social ServicesDivision of Public AssistanceP.O. Box 110640

Juneau AK 99811-0640907-465-3329 Fax: 907-465-5154

ColoradoA Colorado Business Commission on Child Care

Financing

As a part of the former Governor's EarlyChildhood Care and Education Initiative, theBusiness Commission on Child Care Financingwas established in 1995 to create a long-term,viable financing plan for a system of high-quality, affordable child care services. Thepublications produced through this initiativeinclude:

Family Friendly Policies...Good for YourBusiness, Your Employees, & the Children inYour Community, a resource guide foremployers developed by the Colorado BusinessCommission on Child Care Financing in

collaboration with the Bright Beginningsoffice of the Colorado Children's Campaign.It includes examples of how businesses andcorporations might partner with governmentagencies to enhance child care options andother family-supportive policies.

Report of the Colorado Business Commissionon Child Care Financing summarizes changingworkplace demographics which require newfocus on family issues, in particular child care.It addresses the supply and demand of childcare, the quality of care, and the economicimpact of care and includes the Commission'srecommendations.

A Educare Colorado is a private sector initiativethat has brought business, philanthropy,communities of faith, parents, policy makers,and childcare providers together to enhancethe quality and availability of early care andeducation services. More than 130 communitymembers have been working on planningcommittees, and have identified four keysteps that comprise the primary objectives ofEducare: implementing a public engagementcampaign; improving quality through a ratingsystem, technical support and resources forfacility improvements; working to establish fullfunding for universal care; and evaluating theimpact of these efforts.

Contact:Doug Price, President of the BoardEducare Colorado303-322-1553 ext. 106

Stepping Up Thgether: Financing Early Care and Education in the 21st Century

51

52

6 Appendix E

FloridaA Florida Child Care Executive Partnershipaims to provide access to affordable, qualityearly care and education programs thataccommodate parents' work schedules througha public-private partnership. Florida matcheseach dollar an employer pays to subsidize childcare costs for employees who qualify for state-subsidized child care. Members of the ChildCare Executive Partnership board are appointedby the Governor and include executives fromsome of the state's leading employers, anassociation representing thousands of Florida'sbusinesses, the child care community and theGovernor's chief of staff. The Partnership'saccomplishments include winning approval fora plan mandating state funds to match employercontributions. As a result, 7,000 additionalchildren of working parents are being served bythe child care subsidy program in Florida.

Contact:Susan Muenchow, Executive DirectorFlorida Children's Forum2807 Remington Green CircleTallahassee, FL 32308850-681-7002

or:Larry PintacudaChief of Child Care ServicesFlorida Department of Children and FamiliesFamily Safety and Preservation1317 Winewood Blvd., Bldg. 7, Room 229Tallahassee, FL 32399-0700850-488-4900

HawaiiA Hawaii's Good Beginnings Alliance GoodBeginnings is a public-private partnershipdevoted to the development of an integratedand effective system of early childhoodprograms and services. Good Beginningsencompasses a formalized partnership amongcommunities, business, philanthropy, andgovernment, with each having a mandatedresponsibility for addressing early childhoodoutcomes. The structure has three primaryentities: local county councils; the Good

Beginnings Alliance (a statewide, private,nonprofit charitable organization); and aninterdepartmental council composed of stateagency directors. The Good Beginnings Alliancehas the primary responsibility for overseeingimplementation of family-focused services,quality assurance, coordination andaccountability, financing and resourcedevelopment, and public engagement.

Contact:Elizabeth Chun DirectorHawaii's Good Beginnings Alliance828 Fort Street Mall, Suite 203Honolulu, HI 96813808-531-5502 Fax: 808-531-5702

IndianaA Indiana Child Care Financing Initiative wasdesigned to bring business and communityteams together with national and state expertsto attract private sector resources to improvechild care and boost business productivity. Oneof the goals of this statewide effort is to increasethe role of private-sector employers as leaderson child care issues and investors in high-quality child care for working families.

A public-private child care financing partner-ship, the Indiana Child Care Fund, will raisecorporate, foundation, and other private contri-butions to invest in strengthening the state'schild care infrastructure. The Indiana DonorsAlliance is the official home of the Indiana ChildCare Fund. One of the fund's first projects wasthe development and distribution of a businesstool kit entitled Child Care: It's Good Business.

Contact:Carole SteinIndiana Child Care Financing InitiativeIndiana Family and Social Services AdministrationP.O. Box 7083

Indianapolis, IN 46207-7083317-232-1148 Fax: 317-233-4693www.ai.org/fssa/HTML/inChildFinancing.html

MarylandA Maryland Child Care Business PartnershipGovernor Parris N. Glendening has established

56

through an Executive Order the Maryland ChildCare Business Partnership. Business executivesfrom across the State will join with representa-tives of government, child advocacy groups andparents to examine the availability of child carefor low-wage workers and propose strategies forincreasing it.

Contact:Linda Heisner, Executive DirectorChild Care Administration311 W. Saratoga StreetBaltimore, MD 21201410-767-7128 Fax: 410-333-8699

MinnesotaA Minnesota Early Care and EducationFinancing Partnership was formed under acollaborative agreement between the Allianceof Early Childhood Professionals, Child CareWORKS and KidsPlan in 1997. The Partnership'sstrategic plan is focused on exploring financingand building support in Minnesota for fullyfinancing a high-quality early care and educa-tion system. Core activities have includedsponsoring the Financial Aid Think Tank andestablishing an Early Care and EducationFinance Commission.

A Minnesota Early Care and EducationFinance Commission was formed in thesummer of 1998. One of the Commission's goalsis to develop a long range vision and plan forensuring that every Minnesota child receivesthe care and education that prepares her/himto succeed in school and later life. TheCommission will develop a series of publicreports for policy makers and make recom-mendations for the public and private sectors.

Contact:Margaret Boyer, Executive DirectorAlliance of Early Childhood Professionals1600 East Lake StreetMinneapolis, MN 55407612-721-4246 Fax: 612-721-0435

NebraskaA Business Council on Child Care FinancingGovernor Mike Johanns has appointed a

57

Business Council on Child Care Financing.The council has been organized for the purposeof examining child care in Nebraska from abusiness perspective to develop innovativemethods and to help finance quality child carethat is affordable and accessible to families.Among its goals, the council will work to assessthe financial status of child care in Nebraskaincluding costs and gaps in financing; identifythe financial impact that accredited andaccessible early childhood care and educationprograms have for Nebraska; and recommendstrategies and develop a long-term plan tofinance early childhood care and education.

Contact:Kelly Ptacek, Manager, Early ChildhoodGreater Omaha Chamber of CommerceEducation Department1301 Harney StreetOmaha, NE 68102402-346-5000 ext. 229fax: 402-346-7050

New HampshireA Business Commission on Child Care andEarly Childhood Education was created lastspring by the Governor of New Hampshire torecommend ways to improve child care in thestate. The Business Commission's main missionis to find ways to provide high-quality child carefor more of the state's children and families at amore affordable cost. The Commission releasedits recommendations at the end of June 1999.

Contact:Gina GrapponeGovernor's Office of Citizen's AffairsStatehouse107 N. Main StreetConcord, NH 03301603-271-2121

OhioA According to the State Child Care Planssubmitted October 1, 1997:

In Ohio, the Early Childhood CoordinationCommittee will establish a sub-committee tofacilitate a statewide approach to public-privatepartnership development. The efforts of this

Stepping Up Rgether: Financing Early Care and Education in the 21st Century

committee will focus on gathering informationon what is already occurring across the state,identify successful ventures and makerecommendations for replicating these efforts.The committee will investigate what otherstates have done well and evaluate theirpotential effectiveness in Ohio.

Contact:Marsha HannahChief, Child Care ServicesOhio Department of Human Services65 E. State Street 5th FloorColumbus OH 43215614-466-1043 Fax: 614-728-6803

OregonA Oregon Commission for Child Care is anAdvisory Board to the Governor on the issues,concerns and alternative solutions that arecritical to the development of accessible,affordable, and quality child care. Financing forchild care is one of the issues that thecommission is focused on, along with a varietyof initiatives to support public-privateinvestments in community child care needs.

The Oregon Commission for Child Care,Campaign for Business and Family has aninitiative called "The Big Change," promotingawareness of work/life programs.

The Oregon Campaign for Business and Familyhas also developed an "Employer Thol Kit"which includes information on employer taxcredits, employee needs assessments,cost/benefit analysis, and other policies andservices employers can use to supportemployees' child care needs. The Kit isavailable from the Oregon Child Care Resourceand Referral Network at: 503-375-2644.

Contact:Oregon Commission for Child Care875 Union Street NESalem, OR 97311

503-947-1245 Fax: 503-947-1210www.emp.state.or.us/occc/

6 Appendix E

WashingtonA Washington State Child Care CoordinatingCommittee The Child Care CoordinatingCommittee was established by the WashingtonState Legislature in 1988. Its purpose is toadvise the legislature and state agencies onimproving the quality availability, andaffordability of early care and educationprograms for children and youth in Washingtonstate. The Committee is comprised of 33members, representing various stakeholdersand constituents of the early care andeducation system. Nine subcommittees work onfocus areas: career development, family focus,health and safety, licensing, partnership, publicpolicy, school-age care, subsidy, and systems.The Child Care Coordinating Committee isrequired to report annually to the Legislatureand state agencies, and to make recommendat-ions to maximize funding and improve thequality and quantity of child care in the state.

Contact:Laura DallisonActing Office Chief (as of September 1999)Washington Department of Social and HealthServicesOffice of Child Care PolicyOB2, Box 45700Olympia, WA 98504-5700360-902-7920 Fax: 360-902-7903

A Commission on Early Learning WashingtonState's Commission on Early Learning has beenestablished by Governor Locke to identify gapsin programs for children and parents and tofocus on raising the public's awareness of theimportance of the early years to a child's abilityto learn. One focus of the Commission's work isto mobilize and prioritize public and privateresources to provide parent education andcomprehensive support for children's learningand development.

Contact:Robin Zukoski, Executive DirectorP.O. Box 40011

Olympia, WA 98504 c0011360-902-0660 Fax: 36o-586-528iwww.wa.gov/governor/early/homei.htm

5 8

fta booklet .G5N22 Barbara Young, Robert

59

6n2a0 VGiDisq ada.

BEST COPY AVAILABLE

GO

1POM WHO 60%n LUMBL111 EMUMARIB onDumumnam TWO%Cp AROU NMUFFMAN MUNE:AMON

U.S. Department of EducationOffice of Educational Research and Improvement (OERI)

National Library of Education (NLE)Educational Resources Information Center (ERIC)

NOTICE

REPRODUCTION BASIS

ERIC

This document is covered by a signed "Reproduction Release

(Blanket) form (on file within the ERIC system), encompassing all

or classes of documents from its source organization and, therefore,

does not require a "Specific Document" Release form.

This document is Federally-funded, or carries its own permission to

reproduce, or is otherwise in the public domain and, therefore, may

be reproduced by ERIC without a signed Reproduction Release form

(either "Specific Document" or "Blanket").

EFF-089 (9/97)

S 0 OIL

Reproductions supplied by EDRS are the best that …put together a two-volume series, Stepping Up...

Documents

Transcript of Reproductions supplied by EDRS are the best that …put together a two-volume series, Stepping Up...